The Securities and Exchange Commission recently released mutual fund guidance that advises registrants to reduce the length of the summary disclosure to three to four pages, and to use “plain English” to explain disclosures.
Meanwhile, the long-awaited release of a formal SEC proposal regarding a variable annuity summary prospectus has been pushed off once again. The agency’s regulatory agenda said the scheduled September release date of such a proposal has been pushed to March.
Lee Covington, senior vice president and general counsel for the Insured Retirement Institute, told ThinkAdvisor in an email message that IRI “believes all the work necessary to move this proposal forward has been completed,” and that IRI urges the SEC “to move forward at the earliest possible time.”
Former SEC Chairwoman Mary Schapiro publicly supported developing a VA summary prospectus seven years ago, Covington notes.
IRI’s research shows that “very few consumers are reading any of the full prospectus and that 95% of consumers would prefer a VA summary prospectus,” he says.
While the staff of the SEC’s Division of Investment Management declined in its guidance to offer a specific page limit on a summary prospectus, the staff expects that the summary should not exceed three to four pages. The staff noted in the guidance that it was not “unusual’ for them to review filings with summaries “longer than 10 pages for a single mutual fund and sometimes almost 20 pages in length.”