SEC Chairwoman Mary Schapiro said Thursday the agency is considering a crackdown on target-date retirement funds.
Among the specific issues being investigated is whether use of a particular target date in a funds name is materially deceptive or misleading and should be prohibited, according to a speech she gave before the New York Financial Writers Association annual awards dinner.
Ms. Schapiro also said the agency will consider revising an SEC rule governing use of fund names to require clarification when a particular target date is used, according to the speech.
Ms. Schapiro said the SEC also will review disclosure requirements for the funds to determine whether improvements can be made to enhance investor understanding of target-date funds.
As the popularity of target-date funds continues to grow, it is important that our regulations are appropriately tailored to address the interests of investors who are relying on target-date funds to invest for their lifetime goals, she said.
The announcement came following a daylong hearing on target-date funds that was jointly sponsored by the SEC and the Department of Labor. During the hearing, Ms. Schapiro said the funds are on the SEC and DOLs radar screen because 31 target-date funds with 2010 retirement dates posted returns that varied from -3.6% to -41% in 2008.
These varying results should cause all of us to pause and consider whether regulatory changes, industry reforms or other revisions are needed with respect to target-date funds, Ms. Schapiro said at the hearing.