SEC Proposes Rule on Simplified Prospectus

January 17, 2007

The Securities and Exchange Commission (SEC) issued a proposed rule that every full prospectus must be accompanied by a 3-4 page up-front summary that contains key information for investors such as fees, risk characteristics, fund objectives, and risks and historical returns. The report, issued on Nov. 21, 2007, can be found here. In most cases, the summary can be provided either on line or by traditional mail and in lieu of the full prospectus (to satisfy SEC requirements) as long as investors have access to the full version. Comments on the proposal are due by February 28, 2008. The Department of Labor has said that they will review the comments on the proposed SEC rule and potentially use the SEC summary as a model in providing participants with fee information. The DOL is drafting its own rule regarding fee disclosure to 401(k) plan participants, which is anticipated sometime in March or April.