SEC Issues Final Rule on Preventing Misleading Investment Fund Names

The SEC has released a final rule that amends the “Names Rule” under the Investment Company Act of 1940 — that is, the rule that “addresses fund names that are likely to mislead investors about a fund’s investments and risks.” The final rule’s amendments “are designed to increase investor protection by improving, and broadening the scope of, the requirement for certain funds to adopt a policy to invest at least 80 percent of the value of their assets in accordance with the investment focus that the fund’s name suggests, updating the rule’s notice requirements, and establishing recordkeeping requirements.”

The final rule will become effective 60 days after the date of its publication in the Federal Register. For more information, see the press release and fact sheet — as well as the statements by SEC Chair Gary Gensler and Commissioners Caroline Crenshaw, Mark Uyeda, Hester Peirce, and Jaime Lizárraga — on the SEC’s Web site.