The SEC’s Investor Advisory Committee (the “Committee”) issued a series of recommendations (the “Recommendations”) regarding the SEC’s proposed amendments (the “Proposed Amendments”) to Rule 482 under the Securities Act of 1933 and Rule 34b-1 under the Investment Company Act of 1940 that are designed primarily to provide potential investors with additional information about target date mutual funds (“TDFs”). (The Proposed Amendments were described in the June 29, 2010 Financial Services Alert.)
Findings. The Recommendations opened with the following findings:
The findings include citations to (1) a third-party study sponsored by the SEC regarding investors’ understanding of TDFs and advertisements for TDFs, which was discussed in the March 13, 2012 Financial Services Alert and (2) a study prepared by the staff of the SEC’s Office of Investor Education and Advocacy regarding retail investor financial literacy, which was discussed in the September 11, 2012 Financial Services Alert.
Recommendations. In broad terms, the Committee recommended that the SEC revise the Proposed Amendments to improve the marketing materials regarding TDFs provided to investors. The Committee also recommended that the SEC act to ensure that retirement plan consultants receive appropriate information to aid them in deciding which TDFs are included as retirement plan options and offered as default investments. The Committee also made the following specific recommendations (each accompanied by a supporting rationale):
SEC Action on the Proposed Amendments. The comment period for the Proposed Amendments ended almost a year ago, on May 21, 2012. The SEC has taken no further action on the Proposed Amendments in the interim.
For more information about the contents of this alert, please contact:
Elizabeth Shea Fries
Consumer Financial Services
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