Even as the SEC tries to improve disclosure in the aftermath of the mutual fund trading scandals, it may be burdening its investors with more information than needed, and in the process, driving up the cost of compliance to companies, according to an article in Forbes.
"It's a disclosure stampede," says James Riepe, vice chairman of fund company
Even though T. Rowe Price wasn't implicated in any of the fund scandals, it had to add five pages to its Mid-Cap Growth Fund prospectus, bringing it to 44 pages, to explain policies regarding rapid trading, selective disclosure and other scandal-related issues. The company ended up mailing out an extra 40 million pages last year at a cost of $800,000.
Mutual fund companies complain that much of the improved disclosure that is going out to investors is actually aimed at planners, brokers and the media. Twice a year investors will now receive detailed discussions of directors' reasons for renewing their funds' contracts with the advisory firms that run them. That alone will require mailing 231 million extra pages at a cost of $6.2 million, the SEC figures.
That money is more likely than not going to come from investors' pockets. For instance,
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.
