News Flash- SEC Requires Funds to Disclose Breakpoints, Adopt Code of Ethics
June 7, 2004
The Securities and Exchange Commission recently voted to require mutual funds to disclose breakpoint discounts in their prospectuses and to adopt codes of ethics. On each measure, the vote was 4-0.
Funds will now be required to provide clear information in their prospectuses and Web sites about breakpoints and to let investors know that they may have to supply financial intermediaries with information in order to be able to qualify for these discounts. The SEC also voted to require registered investment advisors to adopt codes of ethics that set standards of conduct for all personnel and address conflicts that arise from their personal trading. "It is extremely troubling that so much of the conduct that led to the scandals in the mutual fund industry was, at its core, a breach of the fiduciary duty between investment advisors and their advised funds," SEC Chairman William Donaldson said.