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Rating:SEC Mulls Over POS Disclosure Regs Not Rated 0.0 Email Routing List Email & Route  Print Print
Tuesday, April 13, 2004

SEC Mulls Over POS Disclosure Regs

by: Caitlin  Pickall

Monday was the deadline for submitting comments on the SEC’s proposal to enhance disclosure of fund distribution costs and potential conflicts of interest. The SEC received more than 2,500 comments on the proposal, which would require broker-dealers to provide mutual fund investors with point of sale and confirmation disclosures detailing any sales loads and asset-based sales charges.

The Investment Company Institute supported the proposal. In her letter on behalf of the ICI, acting general counsel Amy Lancellotta noted the group’s long-standing commitment to increased point of sale disclosures.

Several broker-dealers supported the goal of increased disclosure, but disagreed with the proposal because of the costs it would create. The SEC estimates that implementing the new disclosures would impose one-time costs of approximately $157,407 per broker-dealer and recurring annual costs of $367,593 per broker-dealer.

Stephen A. Batman, CEO of 1st Global Capital Corp., argued that “since the cost of these rules will be incurred primarily on a per-transaction basis, it will disproportionately weigh on small investors who are investing a small amount every month in a few mutual funds.” He said that under the SEC’s estimates, the new rules would cost more than $55 annually for each of the 54 million households’ invested in mutual funds.

Individual investors generally supported the proposal.  

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