November 15, 1995
TO: SEC RULES COMMITTEE No. 120-95
SUBCOMMITTEE ON ADVERTISING No. 24-95
RE: INSTITUTE PROPOSALS TO IMPROVE REGULATION OF INVESTMENT
COMPANY ADVERTISING
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In July, the Institute submitted a set of recommendations to the Division of Investment
Management to implement a variety of significant improvements in investment company
regulation. The Institute recently submitted a supplemental set of recommendations for
Commission action to improve the regulation of investment company advertising. A copy of
our supplemental submission is attached.
The Institutes latest recommendations would broaden the types of information that
may be included in sales material under Rule 134 of the Securities Act of 1933 to permit:
the use of pictorial illustrations and narrative descriptions of the effects of tax-free
compounding, historical market performance, and similar economic information;
a description of the total assets that an investment companys adviser manages, including
non-investment company assets under management;
information concerning an investment companys size and capabilities, such as a
description of the number of shareholders accounts of the investment company and the
number of research analysts or other key advisory personnel who have been retained on
behalf of the investment company; and
references to a toll-free telephone number or other source of information concerning an
investment companys performance.
The Institutes submission also recommends that the Commission amend Rule 482
under the Securities Act to provide investment companies with a grace period in which they
may update total return information contained in stand-alone sales material. Finally, the
submission recommends amendments to Rule 135a under the Securities Act to permit
references to an investment company family.
Thomas M. Selman
Associate Counsel
Attachment