SEC’s Rule 30e-3 Change: How Financial Firms Need to Prepare for the Shift

Back in October 2022, the Securities and Exchange Commission (SEC) released amendments to Rule 30e-3. Essentially, the changes instigate major reforms to: 1) shareholder reports for open-end mutual funds and exchange-traded funds (ETFs) registered on Form N-1A; and 2) advertisement rules for all registered investment companies, including closed-end funds and business development companies (BDCs).

These final rules and form amendments (aka the Final Rules) fundamentally transform shareholder reports, turning them into condensed documents that may be as short as three pages in length. Other significant changes include:

  • Open-end mutual funds and ETFs are excluded from the scope of Rule 30e-3, thereby again mandating the delivery of shareholder/investor reports and barring these funds from making reports available online only. Instead, the fund firm/company must provide a print annual or semi-annual report. (An electronic report may be provided If the fund shareholder has consented to electronic delivery.)
  • The Final Rules define which elements are required in the new concise form of the report, which could be as short as three pages.
  • The Final Rules state that the fund company must prepare a separate report for each series of a fund and for each share class of a fund. Hence, if an investor owns more than one class of shares of a fund, the investor will receive more than one report. 

What the changes mean for investor communications

The SEC’s Final Rules are asking financial firms to take a multi-layered approach to shareholder reports. Simply put, they want communications to be more tailored and modernized to support investors’ needs. The SEC’s stated goal is that shareholders receive information that is more narrowly tailored to their specific investments and to reduce the complexity of disclosures. 

How O’Neil can help

Understanding the full scope of the Final Rules can be both complex and time-consuming. There is a host of information available on At O’Neil, our team of experts is also closely reviewing all aspects of the Final Rules, as well as the impact on the financial industry and firms’ investors.

Fortunately, we have solutions available through our all-in-one customer communications platform, ONEsuite. Some things you can manage through the platform include:

  • Creation of personalized and automated financial documents and reports
  • Update client preferences for print, digital, or both in real-time
  • Manage financial report updates and changes
  • Distribute reports according to SEC requirements and investor preferences

Financial firms have some time before the SEC changes are enforced, but it’s never too soon to start planning for how you’ll adjust your communications strategy and tools.

O’Neil’s ONEsuite platform is the industry’s end-to-end communications creation, management, and distribution platform. We also lead the way in ensuring our clients are fully compliant with all regulatory standards. As markets fluctuate, regulations evolve and technology advances, we are always here to support our clients’ needs.

Contact O’Neil Today

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