GE Funds wanted to use the records of its institutional accounts to promote new, public funds, and Nicholas-Applegate wanted to be able to cite returns of private accounts. The companies must next petition NASD Regulation, an offshoot of the National Association of Securities Dealers, which shares regulatory power with the SEC over most funds. Assurances aside, this is worrisome stuff. Investors aren't babies, and I don't mean to say that most won't be able to figure out what's going on in a fund ad with a good, close reading. Jack Murphy, chief counsel at the SEC's division of investment management, agreed with me that the SEC's new stance could allow, say, a conservative fund to tout the record of a more aggressive, riskier fund, as long as the differences between the funds are mentioned.
Prospectuses have plenty of room for detailed explanations.
But practically, the marketing people are going to try to limit it. Selman wouldn't say how his group is leaning, though. Inc. All rights reserved.