The Investment Company Institute has expressed support for the SEC’s proposal to require broker-dealers to provide mutual fund investors with a new confirmation and point of sale disclosure document. The SEC proposal would require the disclosure of details about distribution-related costs and potential conflicts of interest that may arise between broker-dealers and their customers in connection with fund transactions.
The Institute noted its long-standing commitment to enhanced ‘point of sale’ disclosure of revenue sharing arrangements beginning in 1997 and expressed most recently in a 23 February letter to the SEC.
“The Institute on several occasions has called for and supported requiring enhanced disclosure of revenue sharing arrangements to better enable investors to assess and evaluate a broker-dealer’s recommendation to purchase shares of covered securities,” says Amy Lancellotta, Acting General Counsel, in the Institute’s comment letter to the SEC. “The new confirmation and point of sale disclosure document proposed by the Commission would achieve these goals by greatly enhancing the disclosure provided to fund investors of the distribution-related costs they will bear. In particular, specific information relating to the amount of any sales loads and asset-based sales charges (commonly referred to as ’12b-1 fees’ would, for the first time, be provided to investors at the point of sale, (i.e., prior to their making an investment decision), as well as in the confirmation they receive on the transaction.”