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ICI Seeks to Lower Privacy Rule Costs


The Investment Company Institute is urging the SEC to clarify key points in proposed privacy rules in hopes of enabling funds to hold down the cost of providing shareholders notices about their rights to keep personal information confidential.

The SEC should permit mutual fund companies to send only one privacy notice for each household in which several household members invest in the same funds, said Craig Tyle, ICI general counsel, in a letter March 31 to the SEC. Householding, or allowing fund companies to send only one privacy notice to a household where several members invest in the same fund family, would help to reduce the amount of paper sent to shareholders, Tyle said.

The SEC adopted a similar householding rule for fund prospectuses on Nov. 5. A proposal to allow householding for fund proxy statements is pending.

The SEC proposed privacy rules March 2 as a result of legislation Congress passed in November. The law and proposed rules require that fund companies give shareholders notice at least once a year of the companies' privacy policies. Under the proposed rules, fund companies that provide shareholder information to unaffiliated firms also must tell shareholders that they have the right not to have their information given to outside companies.

Some firms may decide to send separate notices to shareholders about their privacy rights, Tyle said. But the SEC's initial rules proposal did not explicitly require fund companies to provide their privacy notices in a separate document, a move Tyle welcomed in his letter.

The SEC should make it clear that fund companies can satisfy new privacy notice requirements by including information about shareholders' privacy rights in fund prospectuses, statements, confirmations or newsletters, Tyle wrote.

Several individuals who commented on the proposed privacy rules urged the SEC to adopt an opt-in requirement rather than an opt-out provision.