The Securities and Exchange Commission is being challenged by a consumer group on its proposed "modernization" of the distribution of mutual fund reports to investors.
The SEC announced this week that it is opening up for public comment proposals that are focused on the "modernization of the design, delivery and content of fund disclosures for the benefit of investors."
Among the proposals is a plan to allow mutual funds to deliver shareholder reports by making them free and publicly accessible on a website. Fund investors would be sent a paper notice of each report's availability by mail and also would be given the option to get the paper report, also free.
The rule would be implemented no earlier than January 1, 2021, the SEC said.
The Consumer Federation of America was quick to respond to the announcement, arguing that the rule would make it more difficult for investors who prefer paper reports to get them in that format.
“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," Barbara Roper, the Consumer Federation of America's director of investor protection, said in a prepared statement.
"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,” she continued.
SEC officials could not be reached for comment at press time.
The SEC is taking public comments on the proposals until October 31.