Collins, King Urge SEC to Reconsider Proposed Rule

WASHINGTON, D.C. – U.S. Senators Susan Collins and Angus King sent a letter this week to the Securities and Exchange Commission (SEC) urging the agency to reconsider proposed Rule 30e-3, which would eliminate the current requirement that mutual fund information be delivered to investors in paper form. The new rule, if implemented, would make electronic delivery the default delivery method unless otherwise selected, a move Senators Collins and King say could negatively affect Maine people who do not have regular and reliable access to the Internet by reducing their ability to access the information central to important financial decisions. Senators Collins and King urge the agency to preserve the existing requirement that mutual funds send out their shareholder reports in paper form.

“Experience shows that paper shareholder reporting is a critical necessity for some of our constituents,” Senators Collins and King wrote in the letter. “Rule 30e-3 may impede access to important shareholder data for many demographics within the investor community, especially the elderly, those with disabilities, and other Americans who are often less likely to have regular and reliable internet access. We urge you to give the concerns outlined above strong consideration as you decide whether to proceed with Rule 30e-3.”

In their letter, the Senators also point out that although current SEC rules allow investors to opt-in to electronic delivery, very few have chosen to do so, indicating that most investors prefer to have the information in paper form.

Also joining Senators Collins and King in sending the bipartisan letter were Senators John Boozman (R-Ark.) and Debbie Stabenow (D-Mich.).  The letter is available HERE and the full text is below:

The Honorable Mary Jo White

Chair

Securities and Exchange Commission

100 F Street, NE

Washington, DC 20549

Dear Chair White,

We write to request that the Securities and Exchange Commission (SEC) reconsider SEC proposed Rule 30e-3.  The rule would eliminate the current requirement that mutual fund information be transmitted to investors in paper form.  We are concerned that Rule 30e-3 would reduce the level of disclosure and transparency for investors and believe the rule should not move forward as presently drafted.

As you know, the SEC’s current rules governing mutual fund disclosure provide the ability to opt-in to electronic delivery, yet only a small minority of consumers have chosen to make the switch.  By permitting mutual funds to satisfy shareholder report requirements through an online posting, Rule 30e-3 would immediately shift the burden for the continuation of paper-based reporting to investors.  Also, experience shows that paper shareholder reporting is a critical necessity for some of our constituents. Rule 30e-3 may impede access to important shareholder data for many demographics within the investor community, especially the elderly, those with disabilities, and other Americans who are often less likely to have regular and reliable internet access.

We urge you to give the concerns outlined above strong consideration as you decide whether to proceed with Rule 30e-3.  Thank you for your consideration.

Sincerely,