SEC Proposes New Amendment to Rule 30e-3 Impacting Open-End Funds

In early August, the Securities and Exchange Commission (SEC) proposed an amendment to Rule 30e-3 that would impact future shareholder reporting for open-end funds by offering a more effective way for investors to access and use fund information.

According to the SEC, the proposal responds to feedback to a 2018 request for comment on retail investors’ experience with fund disclosure. The public can comment on the proposed amendment for 60 days after publication in the Federal Register.

Amended Scope of Rule 30e-3

Although Rule 30e-3 is effective under the existing framework, funds are not permitted to begin relying on it until January 1, 2021. The rule generally permits funds to satisfy shareholder report transmission requirements by making these reports and other materials available online and providing a notice of their availability, instead of directly providing the reports to shareholders. Investors who prefer to receive the full reports in paper may choose that option free of charge anytime.

The amended scope of Rule 30e-3 would exclude open-end funds but not affect the availability of Rule 30e-3 for other registered management companies or registered unit investment trusts. The proposal would help ensure that all open-end fund shareholders experience the benefits of the proposal’s modified disclosure framework, which contemplates direct transmission of concise shareholder reports that serve as the central source of fund disclosure for existing shareholders.

In addition, the SEC notes that the proposed framework would continue to recognize investor delivery preferences and reduce expenses associated with printing and mailing.

Notice and Access Solution

At Mediant, our Notice and Access solution can help brokers and funds easily comply with the requirements of Rule 30e-3. Our end-to-end solution not only ensures shareholder delivery preference management, but also provides custom-branded hosting sites, print and electronic distribution, allowing for better shareholder engagement and communications to the end-user.

https://www.sec.gov/news/press-release/2020-172