Corporate Governance

SEC Votes to Make it Harder for Investors to Receive Paper Mutual Fund Disclosures

Statement of CFA Director of Investor Protection Barbara Roper

Washington D.C. — The Securities and Exchange Commission voted behind closed doors yesterday to make it more difficult for mutual fund investors who prefer paper documents to get fund disclosures delivered in their preferred format. The measure allows fund companies to default investors to electronic delivery of fund shareholder reports based on negative consent, an approach that will reduce investor readership of the disclosures without delivering meaningful cost savings. Consumer Federation of America Director of Investor Protection Barbara Roper had the following statement.

“In a move that prioritizes profits of the mutual fund industry over informed investor decision-making, the Commission voted to erect new barriers for investors who prefer to have their disclosure documents delivered to them in paper through the mail. The Commission adopted this anti-investor proposal without providing any evidence that investors who prefer electronic delivery face any difficulties in exercising that choice, without taking into account extensive evidence that the change is likely to reduce investor readership of key disclosures, and despite the fact that promised cost savings, to the extent they exist at all, are likely to amount to pocket change for typical investors,” Roper said.

“In its press release on the vote, the Commission cynically presents this as ‘an important part of the Commission’s effort to better serve Main Street investors.’ In fact, as Commissioner Rob Jackson, the one commissioner to vote against the measure, has noted, reversing the default goes ‘contrary to everything we know about how individual investors actually behave,’” Roper added. “Meanwhile, an opportunity to improve mutual fund disclosures, as advocated by the SEC’s Investor Advisory Committee, has been squandered.”

Contact: Barbara Roper, 719-543-9468