Dangerous Words: SEC Cautions Firms to Stop Using "Protected," "Guaranteed" in Fund Names

Attorney Advising Disclaimer

The SEC acknowledged concern about fund names, releasing a guidance update advising investment companies, firms, and issuers against using misleading terminology when naming mutual funds, namely and specifically through the use of the words "protected" or "guaranteed."

Explaining the guidance update as an initiative intended to "eliminate the potential for investor misleading," the Commission explained that by using a name that suggests safety or protection from loss—such as those including the words "protected" or "guaranteed"—fund managers may inadvertently mislead the investor into thinking the fund carries less risk than it actually does.

On its end, the SEC also heightened the scrutiny with which it evaluates such misleading fund names, voicing an intention "to object to names" that imply or create a false impression of protection, safety or minimal risk where such protections do not otherwise exist.

The SEC identified short-term fixed income instruments, exchange-traded funds ("ETF") and other structured or collective investment scheme funds.

If you have invested with a broker, adviser or firm whose marketing of a fund using misleading terminology or titles such as "protected" or "guaranteed" has proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.

News: SEC: Don't Use 'Protected' or 'Guaranteed' in Fund Names (ThinkAdvisor)

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