ICI Supports Measures to Improve Information Provided to 529 College Savings Plan Investors

Washington, DC, January 19, 2005 - The Institute supports changes to the Municipal Securities Rulemaking Board's (MSRB) rules governing advertisements of municipal fund securities, noting in two recent comment letters that the amendments to MSRB Rule G-21 will improve the performance information that is provided to investors and will increase uniformity between the MSRB's advertising requirements and those imposed on mutual funds.

Background
In June 2004, MSRB proposed for comment amendments to MSRB Rule G-21 that are intended to provide investors in Section 529 college savings plans with more information about 529 plan performance, risks, objectives, and expenses. The MSRB completed it review of public comments and, in December, filed amendments with the SEC for approval. The rules proposed by MSRB would impose point-of-sale disclosure obligations on municipal securities dealers that market 529 plans to out-of-state investors.

ICI Position
In letters to MSRB and the SEC, the Institute expresses its support for efforts to improve disclosure in the 529 plan market in order to help investors make informed investment decisions.

In its letter to the SEC, the Institute stated that it is important to have consistent regulation between mutual funds and 529 plan securities because they share many common features in their offer and sale, including in the manner in which they are advertised to investors. The Institute notes that aligning MSRB and SEC advertising rules would benefit investors, broker-dealers, and the NASD, which is charged with inspecting securities firms for compliance with both MSRB and SEC rules. Uniform standards should facilitate the NASD's ability to conduct such inspections, notes ICI.

The Institute reiterates these statements in a letter to MSRB, in which it also notes that the MSRB's proposal is consistent with an Institute recommendation that advertisements for municipal fund securities that show performance data include a phone number or website where an investor may obtain more current performance information.

Related Links
Additional information about the benefits of saving for education, including an online brochure that helps individuals understand 529 plans, is available on this website.