SEC’s Division of Corporation Finance Provides Guidance to Broker-Dealers on Delivery of Mutual Fund Prospectuses to Clients of Discretionary Investment Advisers

May 30, 2019

On April 11, 2019, the Securities and Exchange Commission’s Division of Corporation Finance (Division) provided guidance to broker-dealers with respect to delivery of mutual fund prospectuses to clients of discretionary investment advisers. The Division stated that, for purposes of Section 5(b)(2) of the Securities Act of 1933, it is of the view that a broker-dealer may satisfy its obligation to deliver a prospectus to a client of an investment adviser purchasing shares of a mutual fund by delivering the prospectus to the investment adviser, provided the broker-dealer has actual knowledge that the client has authorized the investment adviser to manage the client’s account on a discretionary basis and to accept delivery of mutual fund prospectuses on behalf of the client.

In its request for interpretive guidance, the Money Management Institute noted its members routinely receive feedback from advisory clients with discretionary accounts who are overwhelmed by the large volume of mutual fund prospectuses they receive and do not wish to receive these prospectuses.

Click here to access the guidance.


Compliance, Investment Advisers, Investment Companies, Mutual Funds, Regulatory