SEC Mutual Fund Rule is “Opt-Out” Program

Jan 26, 2018
By: Elizabeth Bartheld
Vice President, Government Affairs

The Securities and Exchange Commission (SEC) has proposed a rule eliminating the current default requirement for financial companies to transmit information to their investors in paper form (Proposed Rule 30e-3). It’s understandable that an agency would be focused on improving efficiency – but this proposed rule has much deeper implications.

Recent editorials mischaracterize this proposed rule as an “opt-in” program. It’s exactly the opposite, an “opt-out” program.

Financial institutions would issue a one-time notice to investors that financial reports would be shifted to e-delivery unless they take action by requesting to continue receiving financial information by mail. So, unless an investor takes immediate action, they will stop receiving their financial reports.

SEC collected public comments on Proposed Rule 30-e3 and 92 percent of them were in opposition to it. SEC’s own 2012 study found that 71 percent of American investors prefer to read their annual reports in paper format rather than online. That’s decisive public opposition.

Paper and digital formats work together to deliver information to consumers and citizens. In the private sector, many companies use both forms of information delivery to reach the greatest number of people in the most effective way. People who wish to receive paper-based communications and documentation should not be forced to either use digital delivery or forgo the information or service.