Former SEC Commissioner Steve Wallman told staff members of the agency’s Division of Investment Management Friday that they must “tackle” a rule for target-date mutual fund risk disclosure.
While the issue has been debated, such a rule “never seems to be able to get to the finish line,” Wallman said during a panel discussion at the Practising Law Institute’s SEC Speaks conference in Washington.
Wallman’s comment came as the panel discussed the recently passed final rule requiring open-end mutual funds to have a liquidity risk management program.
David Grim, IM’s director, responded that staff is finding it “difficult” to boil down target-date funds’ risks “into one measure; there are a lot of perspectives on what that should be,” adding that the division will “continue to wrestle” with the issue.
Wallman, CEO of FolioInvesting, countered that the effort shouldn’t be confined to “one measure” of risk. “I’m not sure why this has to be in that category; nothing fits into that.”
Michael Spratt, assistant director in the IM division’s Disclosure Review and Accounting Office, noted on the panel that IM reviewed “more than 7,000” new product filings last year, performing a “targeted, risk-based review.”