SEC Division of Investment Management (the "Division") Director Dalia Blass provided an overview of recent Division developments related to fund disclosure, the fund use of derivatives, and staff guidance.

In an address at the ICI Securities Law Developments Conference, Ms. Blass described Division efforts intended to improve the quality and usefulness of information that investors receive about funds and advisers. She said that the Division developed simpler ways for investors to provide feedback on proposals that directly affect them (e.g., a "feedback flier,") which allows investors to submit comments without needing to review an entire proposal or write a letter. Ms. Blass also noted that the SEC adopted ICA Rule 30e-3 on the internet availability of shareholder reports, issued a request for comment on the framework for fees that intermediaries charge to deliver disclosure documents, and proposed a short-form summary to explain the terms of an investor's relationship with a broker-dealer or investment adviser.

Ms. Blass contended, however, that in order for investor experiences to truly improve, asset managers, counsel, data aggregators and other service providers must play a more significant role. These market participants can (i) ensure that a fund's prospectus and summary prospectus provide a roadmap of the fund's strategies and risks, (ii) write fund disclosures in a clear and concise manner and (iii) engage with staff on fund-specific questions.

Ms. Blass also reported that the SEC is working on to improve current guidance on funds and derivatives. She said the Division is considering how to respond to several questions:

  • How should we think about leverage risk in a dynamic market?
  • What role should risk management play?
  • What are funds doing today?

Ms. Blass welcomed risk managers, sponsors and scholars to share their respective thoughts.

Consistent with SEC Chair Jay Clayton's recent remarks, Ms. Blass reaffirmed that staff statements regarding rules or regulations are non-binding, and that the Division will keep and review prior statements on an ongoing basis to determine whether they should be modified or rescinded.

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