October 26, 1990
TO: MEMBERS - ONE PER COMPLEX NO. 48-90
SEC RULES MEMBERS NO. 74-90
UNIT INVESTMENT TRUST MEMBERS NO. 69-90
RE: STAFF ISSUES LETTER ON USE OF "GUARANTEED" AND "INSURED" IN
FUND NAMES
__________________________________________________________
In the attached letter, which has been sent to investment
company registrants, the Acting Director of the Division of
Investment Management and the Director of the Division of
Enforcement express the SEC's "serious concerns" over funds whose
names imply that their shares are guaranteed or insured by the
U.S. government. The letter notes that even if a majority of an
investment company's assets are guaranteed or insured by the U.S.
government, the securities issued by the investment company are
not.
The letter states that the Division of Investment
Management will not accelerate the registration statement of a
government fund that contains terms such as guaranteed or insured
in its name and that it may recommend to the SEC that it issue an
order refusing to permit any such registration statement to go
effective. The letter also instructs funds whose names currently
contain terms such as "guaranteed" or "insured" in conjunction
with words such as "United States" or "U.S. Government" to take
"immediate action to remove those words from their names." In
addition, funds should ensure that their advertisements do not
imply that their shares are guaranteed or insured by the U.S.
government. The staff will consider recommending enforcement
action against funds that continue to use these terms in their
names or advertise in the manner described.
Registrants are instructed to direct questions on the
letter to Carolyn Lewis of Division of Investment Management.
Craig S. Tyle
Associate General Counsel
Attachment