The Securities and Exchange Commission has proposed a new rule that would require investors to take into account risks in allocating money to mutual funds, bonds, stocks and other investment vehicles.
The SEC, which is the lead agency regulating investment products and services, said in a statement Monday that the rule “will increase transparency in the markets and increase investor confidence and security.”
But, as Bloomberg News reported, the rule would require a greater degree of disclosure than the SEC is proposing, and some investment managers say the requirement is a waste of time.
For many investors, the SEC’s proposal is a way to keep tabs on the company they’re investing in.
Many of the companies listed on the SEC website do not have SEC disclosure requirements.
For some, the requirements would not be necessary.
For example, a hedge fund manager at a major mutual fund company said he thinks that the SEC will “implement the rule as it’s written and just let the market decide.”
“It’s not a mandate for investors to buy all mutual funds or hedge funds.
That’s not what we want,” he said.
But many people aren’t buying the proposed rule.
“The SEC is saying, ‘Here’s how you do it, here’s how it’s supposed to work,'” said Scott Boggess, a former SEC lawyer who now heads the investment services firm Boggesses and Associates.
“There’s a lot of confusion.
The people who are really taking advantage of it are not paying attention.
And they have no idea how it works.”
The SEC has also said it is looking into whether the proposed disclosure requirements will affect the performance of fund managers and their investors.
SEC rules are meant to make investment decisions on an “accurate, fair and timely basis,” the agency said in its proposed rule, which will be made public this week.
A spokesman for the SEC did not respond to a request for comment.
“We look forward to working with the SEC to address these concerns as they arise,” said Michael M. Gagnon, a spokesman for U.S. Securities and Investment Commission.
“If any investment fund managers or their clients need more clarity about the SEC rule, we will be happy to address those concerns.”