Division of Investment Management Issues ADI on Principal Risks Disclosure

September 11, 2019

On September 9, 2019, the SEC’s Division of Investment Management (the “Division”) issued Accounting and Disclosure Information (“ADI”) 2019-08 on “Improving Principal Risks Disclosure.”  The ADI provides the staff’s views on best practices for risk disclosures for registered investment companies (“funds”), including ordering risks by importance (rather than alphabetically), tailoring risk disclosures to a fund’s particular investment strategy, disclosing whether a fund is not appropriate for certain investors (e.g., a short-term holding for investors with a long-term time horizon) and including non-principal risks in the fund’s statement of additional information.  Division Director Dalia Blass articulated some of these concerns about fund risk disclosures in a speech at the ICI Securities Law Developments Conference in 2018.  A Seward & Kissel memorandum discusses ADI 2019-08 in greater detail.


Investment Companies, Mutual Funds, Regulatory