November 26, 2007
The proposal is very much in keeping with the Commissions obligation to ensure relevant disclosures to investors.
Clearly, disclosure of incomprehensible information does not meet that test.
My concern with the Commissions proposal is that it does not go far enough as I read it, the proposal only applies to mutual funds and the disclosures they make.
What I dont understand is why the principles and practices of the Commissions proposals are not made applicable to brokers. The turgid, number-filled broker statements I receive every month no more tell me how well Ive done or how good my brokers advice has been than would be the case if I were to read the dictionary in its place.
Every investor should be able to easily rank his performance while a customer of a broker with the performance of such indices as Dow Jones or Russell 2000. This would require broker statements to rank their customers performance – i.e. percentile returns – with the returns the customers would have had, if their indices had been withdrawn and/or invested at the same time but invested instead in baseline indices. Brokers would be able to note that index funds are subject to fees, but really how one did relative to fee performance of customer-chosen indices would be of extraordinary value.