Disclosure Errors for Registered Funds | Liam Clarke Insights
Vigilant Insights
Introduction
The SEC’s Investment Management Unit reported this month (January 2025) that many ETFs, Mutual Funds, and Money Market Funds have errors in their disclosures and are lacking required information. Disclosure accuracy is low-hanging fruit for the SEC.
While typographical errors and omissions are generally accidental, they can lead to further investigation by the SEC that may result in charges.
Liam Clarke, CPA, MA, Director at Vigilant, provided commentary in Ignites about this topic.
Liam Clarke Insights
Examples of errors found include:
- Failing to include website links for required information.
- Failing to link to regulatory documents such as a Statutory Prospectus.
- No inclusion of CUSIPs or other identifiers with daily holdings.
- Representation of premiums and discounts as dollar figures instead of percentages.
- No disclosure of historical premium and discount information, or data that is not from the most recent quarter end.
- Disclosures for semi-transparent or non-transparent ETFs.
- Fund’s Financial Statements, which are posted separately from the Annual Report as a result of the Tailored Shareholder Report.
Some ETFs had premiums and discounts greater than 2% for at least seven consecutive trading days. However, few of the ETFs disclosed or discussed this important fact, as required by Rule 6c-11.
Funds should be monitoring their disclosures for errors or omissions; Liam mentions how a Fund that historically never had such high premiums or discounts could overlook it and fail to disclose. He highlights that while these oversights may be understandable, Funds need to tighten up their procedures to prevent them from happening.
Liam recommends using the recent SEC’s communication as an opportunity to reassess whether your Firm’s website is up to par.
Vigilant’s Conclusion
For Registered Funds, it would be prudent to take the time to evaluate their current procedures in place. Firms with Registered Funds should refamiliarize themselves with disclosure requirements and review their documents.
Vigilant can provide Best Practice Compliance Review on your existing policies, procedures, disclosures and overall Compliance Program. Schedule a call with us today to learn more about how our Best Practice Compliance Review is performed.