The Securities and Exchange Commission (“SEC”) issued a “no action letter” on October 26, 2011 indicating that issuing disclosures compliant with the Department of Labor (“DOL”) participant fee disclosure rules will not be considered inconsistent with the SEC Rule 482 advertising requirements that apply to mutual funds.

Participant Fee Disclosure RuleDOL Regulation Section 2550.404a-5 requires plan administrators of participant-directed individual account plans to disclose, among other things, plan and investment-related information. Initial disclosures are not required until 2012. The performance data required to be disclosed in the regulation must be presented in a chart or other comparative format. Generally, the chart must include the average annual total return of the fund for the one-, five, and ten-calendar year periods ending on the date of the most recently completed calendar year. The DOL regulation also requires certain other disclosures, but, with respect to a money market fund, does not require inclusion of the fund’s most recent yield.

SEC Rule 482This SEC rule requires advertisements and other sales materials for certain mutual funds to include, among other disclosures, uniformly calculated performance information. In general, the rule requires performance data to be current as of the most recent calendar quarter ending prior to the publication of the advertisement (or sooner if the advertisement is provided telephonically or through an Internet site). An advertisement for a money market fund must also include a quotation of the fund’s current yield.

Problem – Comments submitted in response to the DOL regulation were concerned that additional information would have to be included in the participant fee disclosures so that the disclosures could also comply with SEC Rule 482.

Resolution – The SEC’s no action letter provides comfort that issuing disclosures which comply with the DOL participant fee disclosure rules will not violate the SEC Rule 482 requirements. The disclosures will contain plenty of information for participants to wade through and digest. The good news is that more information will not have to be added to the disclosures, which would only make them more complicated for participants to understand and undermine the intended purpose of the disclosures.