Alert November 01, 2011

SEC Staff Provides No-Action Relief with respect to Mutual Fund Performance Information Provided in accordance with DOL’s New Participant-Level Retirement Plan Fee Disclosure Requirements

The staff of the SEC’s Division of Investment Management (the “Staff”) provided no-action relief requested by the Department of Labor (the “DOL”) with respect to registered fund performance disclosures made by plan administrators to plan participants or beneficiaries to satisfy the DOL’s new participant-level retirement plan fee disclosure requirements in DOL Regulation 2550.404a-5 under ERISA (the “Participant Disclosure Regulation”).  (The Participant Disclosure Regulation was most recently discussed in the July 19, 2011 Financial Services Alert.)  In broad terms, the no-action relief provides that (a) performance information for registered funds that is required by the Participant Disclosure Regulation’s disclosure requirements will be treated as complying with the standards for performance information set forth in Rule 482 under the Securities Act of 1933 (the “1933 Act”) and (b) such information need not be filed with the SEC pursuant to Rule 497 under the 1933 Act or an applicable national securities association (e.g., FINRA) pursuant to Section 24(b) of the Investment Company Act of 1940.  The letter also conveys the Staff’s understanding that the staff of FINRA intends to interpret FINRA’s rules applicable to the information provided by a Plan Administrator to Plan Participants that is required by and complies with the disclosure requirements under the Participant Disclosure Regulation in a manner consistent with the Staff’s position expressed in the no-action relief.