1. (NU) - From encyclopedias to
microfiche, we’re surrounded by
casualties of the digital age, relics
of the era before the Internet rev-
olutionized daily life. But even as
technology has rendered many ad-
vancements, Americans still pre-
fer -- and need -- important infor-
mation on paper, especially when
it comes to financial documents.
That’s why Consumer Action
is calling on the Securities and
Exchange Commission (SEC) to
abandon its efforts to make e-de-
livery the default method for im-
portant mutual fund investment
materials. While such a move
would lower mutual funds’oper-
ating costs, the true cost would
likely be passed onto individual
investors. We all need to tell Con-
gress that this can’t happen.
Despite the fact that the SEC’s
own study finds that 71 percent
of American investors prefer to
read shareholder reports in pa-
per format, the agency approved
and proposed Rule 30e-3, which
would permit mutual funds to
switch investors to electronic de-
livery of shareholder reports
without ever receiving specific
permission to do so.
Under the new rule, mutual
funds would distribute a one-time
notice, after which the burden
would be shifted to investors to
declare a continued preference
for paper reports. If they don’t
take explicit action to request pa-
per delivery of these shareholder
reports, investors will only be
able to access them online.
Shareholder reports are critical
tools containing the information
investors need to make informed
investment decisions, and many
investors prefer and need to see
that information on paper. In fact,
of the more than 700 comments the
SEC has received regarding Rule
30e-3, 94 percent of them express
objection to the rule and urge the
SEC to rescind it.
While Rule 30e-3 reflects the
broader trend toward digitization,
the reality is that most Americans
prefer to receive financial infor-
mation in paper form, and, for
many Americans, viewing share-
holder reports online is simply not
an option. Even though e-deliv-
ery of shareholder reports has been
available for years, only a small
minority of investors have chosen
that option. In fact, a Pershing sur-
vey conducted in 2013 shows that
30 percent of investors do not use
the Internet for investment corre-
spondence due to concerns about
security.And according to the Pew
Research Center, 41 percent of
Americans over 65 years of age do
not use the Internet at all, yet 34
percent of this population owns
mutual funds.
Rule 30e-3 could also disen-
franchise many small investors
across the country, including those
in rural areas without reliable In-
ternet and those with smaller in-
comes. After all, analysis of cen-
sus data commissioned by the
advocacy group Consumers for
Paper Options shows that house-
holds with incomes below the na-
tional average are 18 percent less
likely to have Internet access.
Even more concerning is the
fact that the SEC has tried this
scheme before -- with disastrous
results. In 2006, the SEC shifted
the mailing of proxy statements
from paper to e-delivery, and
from 2007 to 2009, proxy voting
declined by 80 percent. E-deliv-
ery simply isn’t a preferred or
reliable method for important
investment information.
Consumer Action is asking
Congress to ensure that the SEC
cannot implement Rule 30e-3,
and we urge you to join us. Visit
www.consumer-action.org and
use our Take Action Center to
quickly write your members of
Congress. We need to tell law-
makers that the needs of individ-
ual Americans should come be-
fore the desires of the financial
services industry.
Linda Sherry is the director
of national priorities at Con-
sumer Action, a national non-
profit organization dedicated to
empowering underrepresented
consumers nationwide through
multilingual financial education
materials, community outreach
and issue-focused advocacy.
Tell Congress to Protect
Paper Investor Reports
GOVERNMENT
NewsUSA
NewsUSA
A new SEC rule may prevent
millions from accessing
shareholder reports.