April 1, 2004
I applaud the SEC in proposing timely disclosures by a broker-dealer to an investor on the costs, revenues, and associated effects of a pending mutual fund investment. The proposed disclosures made at the point of sale will allow the investor to more fully consider the implications of the purchase and the potential financial motives and incentives of the broker-dealer and its employee. The disclosures should be made in writing and provided to the investor prior to consummating the investment decision.
The proposed attachments are reasonably simple and informative and should be understandable for most prudent investors. I am somewhat dubious that the straight-forward disclosures on potential conflicts of interest and special compensation arrangements are robust enough to result in Yes answers for the more arcane and convoluted relationships. However, I am unable to offer suggestions, at this time, for changing the wording or adding additional elements to the forms. I am certain that the SEC commissioners and staff have examined a plethora of arrangements and their ramifications.
I thank you for providing me this opportunity to comment on your proposal. Restoring the confidence of investors is a critical challenge of the next several years. This SEC proposal is a significant step forward in that direction.
Roland L. Laing, CPA