SEC Tweaks Fund Ad Rules: More Honesty, Less Hype?
Published Date: 4/8/2025
Notice
Summary
The Securities and Exchange Commission wants to update Rule 482, which helps investment funds share important info when advertising their shares. This change affects investment companies and aims to make ads clearer and more honest about risks, fees, and performance. No big cost changes are expected, but funds will need to follow the updated rules once approved.
Analyzed Economic Effects
4 provisions identified: 3 benefits, 1 costs, 0 mixed.
Estimated Compliance Burden on Funds
The Commission estimates that complying with the amended Rule 482 will create a total annual burden of 577,896 hours and an average time cost of $213,154,498. This is the agency's estimate for the paperwork and time burden associated with the information collection required by the rule.
Performance Data and Month‑End Figures Requirement
When a fund advertisement includes performance data, the ad must include standardized performance information, any sales loads or nonrecurring fees, a legend that past performance does not guarantee future results, and a statement that month-end performance figures are available. Funds that include performance must make month-end figures available either on a website or by a toll-free telephone number and must disclose that availability in the advertisement.
Fund Ads Must Name Prospectus and Risks
If you see an investment fund advertisement, the fund must include a disclosure telling you to consider the fund's investment objectives, risks, charges, and prospectus, and must highlight that the prospectus or summary prospectus is available. The rule (Rule 482, 17 CFR 230.482) explicitly requires that these disclosures appear in qualifying advertisements.
Money Market Fund Risk Statement Alignment
Amendments adopted November 7, 2024 correct outdated cross-references and align the risk statements that money market funds must include in advertisements with the risk statements required in prospectuses. The change removes inconsistencies so that an investor reading an advertisement sees the same risk language as in the prospectus.
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