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CU Submits Letter to the SEC Calling for Improvements in Agency’s Pre-Sale Disclosure Proposal for Sale of Mutual Funds

April 21, 2004

Consumers Union, other Groups Submit Letter to the SEC Calling for Improvements in Agency’s Pre-Sale Disclosure Proposal for Sale of Mutual Funds
Organization supports stronger disclosure statements prior to sale of mutual funds

WHY: The SEC is proposing mutual fund disclosure forms at the point of sale and point of confirmation that will address conflicts of interests and fee structures.
WHAT: Consumer Union and other consumer groups believe it is necessary to provide useful comparable information at a point in time where investors can act on this information and that the SEC’s proposal- while a good reform, could be improved.
• Strengthening cost disclosures to include all material information and a good faith estimate of all expenses will reduce the ability of brokers to inaccurately portray the costs and make it possible for regulators to identify brokers that routinely do so.
• The pre-sale disclosure should include comparative cost information, not just the confirmation statement.
• The most complete explanation of conflicts of interests should be included in the point of sale disclosure.
• Disclosures regarding costs attributed to different share classes should be provided in dollar amounts in a comparative format.
WHO: Consumers Union, Consumer Federation of America, Democracy Fund, and Consumer Action
• Sally Greenberg, Consumers Union
• Barbara Roper, Consumer Federation of America
• Mercer Bullard, Democracy Fund
• Kenneth McEldowney, Consumer Action
HOW: Comments due April 12, 2004. See our comments at http://www.sec.gov/rules/proposed/s70604/s70604-702.pdf
Contact the SEC at http://www.sec.gov/investor/mfundforms0104.htm to comment on rule proposals.