The Commissioners Back White's Disclosure Vision For MFs and SMAs
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Thursday, May 21, 2015

The Commissioners Back White's Disclosure Vision For MFs and SMAs

The four other SEC commissioners are backing Mary Jo White's vision for boosted disclosures for mutual funds, and for asset managers in general. If her vision becomes a reality, fundsters can expect more frequent portfolio holdings disclosures, more focus on derivatives and the like, a shift away from paper disclosures (except for those who want it) ... and more disclosures from SMA managers.

Yesterday at an open meeting of the Securities and Exchange Commission, Chair White, introduced two staff recommendations to "modernize and augment" investment disclosures from both asset managers and from the funds they manage. Commissioners Michael Piwowar (a Republican), Daniel Gallagher (a Republican; reportedly on his way out from the regulatory agency), and Luis Aguilar (a Democrat: his term is about to end) all spoke up in favor of the proposals.

Andrew Ackerman of the Wall Street Journal reports that all five of the Commissioners voted in favor of the proposal. A 60-day comment period will begin once the proposed regulation appears in the Federal Register.

The proposal comes less than two weeks after White named David Grim director of the SEC's division of investment management. (Multiple commissioners mentioned in their remarks that yesterday was Grim's first SEC open meeting as director of the division.)

The proposal has a number of pieces. It would create a monthly mutual fund portfolio reporting form, Form N-PORT, that might replace the current Form N-Q (through which funds publicly report holdings twice a year). Form N-PORT would go to the SEC, with the monthly report at the end of each quarter being publicly released. The proposed Form N-CEN annual reporting form would replace Form N-SAR. Asset managers that offer separately managed accounts would have to report more on those in an updated Form ADV. Asset managers (including fund firms) and funds themselves would have to disclose more specifically related to derivatives and leverage.

And fundsters would be able to shift to online shareholder disclosures as a default (with paper disclosures still available on-demand free-of-charge), as opposed to vice versa.

News of White's updated disclosure vision broke in September. White first outlined her vision in December, and did so again in February. The SEC's proposals also come as the shadow of SIFI designations looms over the largest asset managers.

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