SEC Implements Stricter Rules to Combat Misleading Investment Fund Names and Greenwashing
The Securities and Exchange Commission (SEC) has adopted amendments to the Investment Company Act "Names Rule" to prevent misleading or deceptive investment fund names. The amendments require funds with names suggesting a particular investment focus to adopt an 80 percent investment policy, review their portfolio assets quarterly, and comply with enhanced prospectus disclosure requirements. The amendments also introduce additional reporting and recordkeeping requirements. The new rules aim to align a fund's portfolio with its name, promote fund integrity, and protect investors. The amendments will become effective 60 days after publication in the Federal Register, with compliance deadlines ranging from 24 to 30 months depending on the fund's net assets.