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

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.

FOR IMMEDIATE RELEASE
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.

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