December 27, 1989
TO: BOARD OF GOVERNORS NO. 78-89
SEC RULES MEMBERS NO. 74-89
RE: LETTER TO SEC CONCERNING LENGTH OF PROSPECTUSES
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As you know, the SEC has proposed an amendment to the
registration statement for closed-end funds requiring disclosure
of fund portfolio managers. The Institute submitted a comment
letter opposing the proposal except in certain circumstances. At
the recent SEC/ICI Procedures Conference, Matt Fink, in his
introductory remarks, briefly addressed the portfolio manager
proposal specifically but then expressed a much broader concern
which was raised by the proposal. His concern was over what he
termed "disclosure creep," i.e., the increasing number of
disclosure requirements being added to a fund's prospectus by the
Commission and the staff. Those additional requirements have, in
the aggregate, substantially increased the length of fund
prospectuses and undercut the concept of the simplified
prospectus.
Last Thursday, the SEC approved for public comment
amendments to the mutual fund registration statement which would,
among other things, require disclosure of mutual fund portfolio
managers. (The release proposing this requirement has not yet
been issued.) In view of this proposal, the Institute submitted
the attached letter to Chairman Breeden reiterating our concern
about "disclosure creep" and proposing a solution to the problem,
which would be to adopt an approach akin to "zero-based
budgeting." This approach would require that every time the
Commission or the staff proposes a new disclosure item, a second
proposal also be made to delete or pare down an existing
requirement.
We will keep you advised of developments in this area.
Amy B. Rosenblum
Assistant General Counsel
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