Attorneys warn the “other shoe has dropped” in the SEC’s special Share Class Disclosure Initiative—and RIAs that did not self-report potential 12b-1 fee disclosure violations are now being investigated.
SEC examiners are concerned that the way mobile and personally owned communications devices are used by advisers pose challenges in their meeting obligations under the Books and Records Rule and the Compliance Rule.
The SEC says these changes are needed to reduce obstacles to providing research on investment funds, and to harmonize the treatment of such research with research on other public companies.
When the SEC adopted the new Rule 30e-3 earlier this year, creating a new system for electronic delivery of fund information, it also established a transition disclosure period that starts in January, during which "funds that choose to implement the new delivery method for shareholder reports provide prominent disclosures in prospectuses and certain other shareholder documents that will notify investors of the upcoming change in transmission format.”
The committee says the SEC should explicitly explain that Regulation Best Interest is a fiduciary duty shared equally by advisers and broker/dealer to act in their customers’ best interest.
SEC worked with RAND Corporation to test the efficacy of its mock Customer Relationship Summary form, a key part of the broader Regulation Best Interest proposal; the positive findings differ from reports commissioned by investment industry advocacy groups.
“Because funds bear the cost of shareholder report delivery, intermediaries have little incentive to negotiate lower delivery rates with the fulfillment vendor or otherwise control costs,” the Investment Company Institute argues.
The proposal is intended to help investors better understand these contracts' features, fees and risks, and to more easily find the information needed to make an informed investment decision.
Forty percent are waiting for further clarification, Fidelity learned in a survey.
A test of the summary report found more than 90% of mutual fund investors agreed it was enough to help them stay informed and was a document they would be more likely to read than current reports.
The DOL said it is considering regulatory options in light of a 5th Circuit opinion vacating its previous fiduciary rule, and has on its timeline that a final rule will be issued in September of 2019.
While the Securities and Exchange Commission is firmly controlled by Republican-appointed members, the last Obama-era commissioner says she hopes to find room for compromise to address the pressing issues facing U.S. investors.
According to the SEC’s strategic outline, when Main Street investors seek professional advice, their choices “all too often are not as clear as they should be.”
Regulation Best Interest lays out the core loyalty and disclosure duties of advisers and broker/dealers—and how these can be satisfied.
Noting that they believe a more viable customer relationship summary (CRS) form can still be developed by the SEC as part of its Regulation Best Interest proposal, a group of retiree and investor advocacy organizations has published a report calling the draft CRS form misleading and unhelpful.
The SEC included these proposals as part of its proposed best interest standards for investment advisers.
The agency has issued a proposal that would make it easier for ETFs to come to market.
In response to staff and client feedback, and in the wake of the defeat of the DOL fiduciary rule, the firm is taking steps to reintroduce use of commission-based products for retirement account clients.
In addition, they say the definition of “best interest” is not clear.
They say that additional interpretation of standards of conduct for investment advisers is unnecessary and that imposing broker/dealer standards on life insurers and investment advisers is inappropriate.