Call to Action: Stand up for Paper as SEC Ponders E-Delivery of Shareholder Reports
Ed. note: The following member advisory was submitted by Michael Makin, president and CEO of Printing Industries of America.
WARRENDALE, Pa.—August 7, 2015—The Securities and Exchange Commission (SEC) is considering a proposed rule (Rule 30e-3) that would place an undue burden on investors by shifting the default delivery method for critical shareholder reports from paper to e-delivery. The new rule is fast moving and would eliminate the current default requirement for mutual funds to transmit important information to investors in paper form. Specifically, it would:
- Permit funds to satisfy shareholder report requirements by making shareholder reports and quarterly portfolio holdings available only online.
- Shift the burden on investors by requiring them to opt-in to paper delivery of important fund information as opposed to the current option of opting-in to electronic delivery.
- Confuse potentially millions of investors who suddenly stop seeing important fund performance material from investment firms.
Shareholder reports are important investment tools, and implementing this change will potentially harm millions of investors—the majority of whom have already expressed a preference for paper-based reports.
The industry supports providing investors the option to continue to receive printed and mailed financial services documents without forcing them to jump through federally-mandated hoops to do so. Therefore, Printing Industries of America opposes this proposed SEC rule and urges its members to take action by commenting against the proposed regulation.
Submit your comment in three easy online steps to ensure print’s voice is heard on this issue. Below are talking points that are appropriate to use as your comments; supplement these points as you wish.
By submitting comments to the SEC, you can help protect American investors and stop the dangerous precedent of allowing the government and financial services institutions to decide how information reaches shareholders. The SEC will consider comments through Aug. 11.
Paper is still the preferred method of transmission for investors. According to the SEC’s own study conducted by Siegel + Gale in 2012, 71 percent of American investors said they prefer to read annual reports in paper format rather than online versions, and a large number of respondents also asserted that printed materials yield higher content comprehension than do online materials.
Proposed Rule 303-3 would impede access for many investors, especially the elderly, those with disabilities, and minority Americans—all demographics that are less likely to have regular Internet access. For example, 41 percent of Americans over 65 years of age do not use the Internet yet (Pew Research Center, 2014). According to the Investment Company Fact Book, 34 percent of this population owns mutual funds.
Paper is a superior distribution method for important information. In a recent national survey, 88 percent of respondents said that they understand and can retain or use information better when they read print on paper, and when given a choice, 81 percent of respondents prefer to read print on paper (Two Sides, 2015).
Printing Industries of America encourages members to act today to submit comments by Aug. 11. You are also encouraged to share this call to action with company employees, stakeholders and individual investors. Thank you for taking action!
Should you wish to mail a copy of your comments, please send to:
Secretary Brent J. Fields
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549-1090
RE: Investment Company Reporting Modernization; Release Nos. 33-9776; 34-75002; IC-31610; File No. 57-08-15