The U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness (“Chamber”) appreciates the opportunity to share our views on the Securities and Exchange Commission’s ("Commission") Proposed Rule on “Investment Company Names” (“Proposal”). The Proposal seeks to amend the Rule 35d-1 (“Names Rule”) of the Investment Company Act of 1940, adopted in 2001, for the purpose of ensuring that a fund’s name accurately reflects the fund’s investments and risks.
Investors respond to fund names. Therefore, it is important that a fund name properly reflects its underlying investments so it does not mislead investors. As the Proposal correctly states, asset managers “give considerable thought to the fund names they choose in light of their goals in communicating to investors.”
The long-term approach of the Commission and federal securities laws, and one which we have supported, has been to make sure investors have material information they need and to ensure that information is not fraudulent. The Chamber is generally supportive of updating rules in light of market developments and to address investor protection issues. However, we are very concerned by the unnecessary, sweeping changes to the Names Rule when the Commission has not identified specific problems or abuses to warrant additional rulemaking beyond the existing rules.
