The SEC has said that there is little cause for further concern over Y2K.
Y2K disclosure is no longer necessary for most fund advisers, Barry Miller, the associate director for legal and disclosure at the SEC wrote in a Feb. 11 opinion letter to Craig Tyle, general counsel of the Investment Company Institute in Washington, D.C.
"Year 2000 issues may no longer be material to most funds," Miller wrote. "Most funds likely will determine that there is no longer any need to disclose Year 2000-related matters in the prospectus (or elsewhere)."
In its letter, the SEC responded collectively to what it called "numerous inquiries" as to whether funds have any ongoing Year 2000 disclosure obligations after January 1.
Fund advisers are now free to delete Y2K disclosures in prospectuses and other shareholder communications that the SEC first required two-years ago amid the industry's Y2K remediation efforts and regulators' concerns that Y2K computer problems could cause serious disruptions in the securities markets and for mutual funds.
In 1998, the SEC issued disclosure guidance regarding Year 2000 issues and their possible consequences. Where mutual fund advisory firms determined that Year 2000 issues could affect the firm's operating results or financial condition, the SEC required disclosure.
Most mutual funds added a paragraph containing boilerplate language to their fund prospectuses and some periodic reports to investors. But many funds also chose to dedicate a section of their fund group's website to the Y2K issue to answer questions to allay shareholder fears. A few, like Vanguard Group of Malvern, Pa., addressed concerns in their monthly newsletters to fund investors.
Still the SEC is asking that investment companies use the same care in abandoning Y2K disclosure that they used in deciding whether such disclosure was necessary in the first place.
"Other funds may determine to continue disclosure in face of material Year 2000 uncertainties," said the SEC in its opinion letter. "For example, disclosure may be warranted if a fund determines that other Year 2000-critical dates, such as this year's leap-year anomaly, may cause computer-related problems that may have a material adverse effect on the fund, or that there may be possible material effects of Year 2000 disruptions that have not yet surfaced."