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Portfolio > Mutual Funds

SEC to require public interactive data for mutual funds, public companies

By Staff Writer

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The SEC voted in approval Thursday to require public companies and mutual funds to use interactive data for financial information in an effort to increase the speed, accuracy and usability of financial disclosure and eventually reduce costs for investors.

In an issued press statement, SEC Chairman Christopher Cox said: “Interactive data will help provide investors with the information they need, rather than just a warehouse of forms on which they can try to find it. Interactive data will enable new analysis tools to put key information at every investor’s fingertips within seconds, exactly as the investor wishes to see it.”

For public companies, interactive data compiling will begin on a phased-in schedule next year; mutual funds will compile data in 2011. With interactive data, according to the SEC, all of the facts in a financial statement are labeled with unique computer-readable “tags,” which function like bar codes to make financial information more searchable on the Internet and more readable by spreadsheets and other software. Investors will be able to instantly find specific facts disclosed by companies and mutual funds, and compare that information with details about other companies and mutual funds to help them make investment decisions.

“This action will continue the Commission’s strides towards using technology to provide investors with increased access to information about mutual funds,” said Andrew J. Donohue, Director of the SEC’s Division of Investment Management. “Just last month, the Commission adopted a new mutual fund disclosure framework that will provide investors with key mutual fund information in a concise, plain English format, while using technology to retain the comprehensive quality of the mutual fund information available today. Similarly, the rules adopted today will allow investors, through technology, to compare and analyze information among the array of funds offered in the market.”

Requirements for public companies:
The largest companies who file using U.S. GAAP with a public float above $5 billion will be required to provide interactive data reports starting with their first quarterly report for fiscal periods ending on or after June 15, 2009. This will cover approximately 500 companies. The remaining companies who file using U.S. GAAP will be required to file with interactive data on a phased-in schedule over the next two years. Companies reporting in IFRS issued by the International Accounting Standards Board will be required to provide their interactive data reports starting with fiscal years ending on or after June 15, 2011.

Requirements for mutual funds:
Mutual funds will be required to begin including data tags in their public filings that supply investors with such information as objectives and strategies, risks, performance, and costs. This will allow investors to compare more than 8,000 mutual funds at the click of a mouse. A mutual fund also would be required to post the interactive data on its Web site, if it maintains one.

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