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June 6, 2018<\/p>\n
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Contact:\u00a0Consumer Action’s\u00a0Linda Sherry<\/a>\u00a0(202) 544-3088, NCL’s\u00a0Sally Greenberg<\/a>\u00a0(202) 207-2830<\/span><\/p>\n The National Consumers League (NCL) and Consumer Action have worked for more than two years to ensure that the delivery of\u00a0paper fund disclosures wasn\u2019t flipped. The organizations have filed comments opposing Rule 30e3, spoken at SEC Investment Advisory Committee meetings, and urged investors to press for the paper default. They were expecting to hear a public discussion of the rule at the SEC\u2019s public meeting on June 5,\u00a0before it was pulled from the agenda the evening before and circulated for written consent from the commissioners in lieu of a meeting.<\/span><\/p>\n Sally Greenberg, executive director of the National Consumers League, said: \u201cWe are very disappointed in the 4-1 vote\u2014taken behind closed doors\u2014from the SEC to make it more difficult for mutual fund investors who want paper documents to get fund disclosures delivered in\u00a0paper; an SEC survey in 2011 found that one-third of consumers say they prefer paper copies of their mutual fund reports. The mutual fund industry trade association estimated in 2016 that this will save investors $2 billion in printing and mail costs over 10 years. The winners are clearly the companies, the losers are those consumers who need or want access to paper versions of fund disclosures and will have to know to sign up for paper delivery. We are disappointed the SEC didn\u2019t take into account the extensive evidence that the change is likely to reduce investor readership of key disclosures.\u201d<\/span><\/p>\n Linda Sherry, director of Consumer Action\u2019s DC office, said: \u201cMore than 90 percent\u00a0of the comments submitted to the SEC in 2016 opposed the idea to make electronic delivery the default delivery method for shareholder reports. Despite the concerns raised, which included lack of access to the internet by vulnerable populations, exposure to online fraud and difficulty of reading reports on mobile devices, the SEC chose to vote on its proposal before the public was able to read it.\u201d<\/span><\/p>\n Currently (and for close to 20 years) investors have the option of requesting e-delivery. Some estimates say as many as half of all mutual fund investors have chosen e-delivery already. Those who have chosen to keep paper delivery will, under the new rule, be bothered to act to ensure paper reports keep coming. The new measure is an example of \u201cnegative consent\u2014or \u201cpassive consent\u201d\u2014which means failure to take action is interpreted as agreement. This method of notification is know to decrease consumer participation and likely will reduce investor readership of important disclosures about fund performance, costs and makeup.<\/span><\/p>\n While the rule offers the switch to e-delivery as an \u201coptional\u201d method for delivering shareholder reports, it is highly unlikely that the mutual fund industry will choose to leave the status quo of paper statement delivery.<\/p>\n ###<\/span><\/p>\n About the National Consumers League<\/strong><\/span><\/p>\n