WASHINGTON - The SEC will adopt a rule by year-end requiring a fund's name reflect at least 80 percent of its holdings, Paul Roye, director of the SEC's division of investment management, told a symposium here Oct. 12.
For example, a fund that uses the word "technology" in its name will have to have at least 80 percent of its holdings in technology securities. Currently, the rule requires that only 65 percent of a fund's portfolio reflect its name.
"Our recommendation will be for the commission to adopt the proposal," Roye said. Roye made his comments at a symposium of fund executives held by Fund Democracy, a shareholder advocacy group in Chevy Chase, Md.
The rule was originally proposed and put on the SEC's website for comment Feb. 27, 1997, making it one of the older rule proposals on the commission's docket, said Cindy Fornelli, an advisor to Roye. Only three people submitted comments on the proposal, she said. The commission has waited as long as it has to review the proposed rule because other rule proposals have taken precedence, she said.
Fund Democracy and other shareholder interest groups submitted petitions to the SEC requesting the commission require 85 percent of a fund's holdings reflect its name. The SEC reviewed the issue as a result of petitions recently filed by various shareholder interest groups, including Fund Democracy, said Mercer Bullard, president and founder of Fund Democracy.
"We're very happy with 80 percent," he said. "The only reason this is on the agenda is the petitions that have been filed."