SEC Publishes Release Proposing Mutual Fund Disclosure Changes

The SEC issued the formal release (the "Proposing Release") describing its proposal to (i) revise the disclosure requirements for the statutory prospectus currently used by registered open-end management investment companies ("mutual funds" or "funds") and (ii) create a new "Summary Prospectus" for use in mutual fund sales. The SEC's proposed disclosure changes are designed to create a brief, self-contained presentation of key fund characteristics that would appear in both the statutory prospectus and the new Summary Prospectus. The new Summary Prospectus could be used to satisfy certain prospectus use and delivery requirements under the Securities Act of 1933, as amended (the .1933 Act.), subject to several conditions that include providing investors access to the statutory prospectus and other fund documents via the Internet. The SEC's proposal would amend Rule 498 under the 1933 Act to replace the profile prospectus for mutual funds currently permitted by the Rule with the Summary Prospectus.

Proposed Summary Disclosure Requirements – General

The SEC's proposal would revise Form N-1A, which contains the disclosure requirements for mutual funds, to mandate a plain English presentation of information on specified topics in a prescribed order at the front of the statutory prospectus following the cover page and any table of contents. For the most part, those same disclosure requirements would dictate the exclusive contents of the Summary Prospectus. The specified topics and their prescribed order would be as follows:

1. investment objectives;
2. costs;
3. principal investment strategies, risks and performance;
4. top 10 portfolio holdings;
5. investment advisers and portfolio managers;
6. purchase and sale and tax information; and
7. financial intermediary compensation.

As under the current requirements for the Risk/Return Summary in statutory prospectuses, the disclosure provided in response to the proposed requirements could not include information in addition to that specifically requested or permitted. Information presented in response to the proposed requirements would not, however, have to be repeated elsewhere in the statutory prospectus.

The SEC's proposal would not permit multi-fund presentations of the proposed summary disclosure. In other words, for funds offered together in a multi-fund prospectus, each fund would have to have its own separate, self-contained presentation of the proposed summary disclosure. Similarly, each fund's Summary Prospectus could include information only with respect to that fund. In each case, however, a fund's summary disclosure could reflect multiple classes of the fund. (As discussed in more detail below under the heading Summary Prospectus-Delivery, other information about a fund could accompany its Summary Prospectus, but might, under certain circumstances, limit how the Summary Prospectus could be used.)

Proposed Summary Disclosure Requirements –Topics

• Investment Objective

The proposed summary disclosure would begin with a fund’s investment objectives or goals. A fund could also identify itself by type or category (e.g., as a money market fund or balanced fund).

Expenses

The SEC's proposal would make a number of changes to the requirements governing the fee table that currently appears in statutory prospectuses.

Changed location - The proposal would make the fee table the second item in the summary disclosure presentation (i.e., after the investment objective), moving it forward from its current location in the statutory prospectus where it follows information about investment strategies, risks and past performance.
• Breakpoint Availability
- For funds that offer sales charge breakpoints (discounts based on the amount of fund shares purchased), the proposal would add a brief disclosure to the fee table mentioning their availability. The proposed disclosure, which would also specify the minimum level of investment qualifying for a sales charge discount, would read as follows: .[y]ou may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $[_________] in [name of fund family] funds.. A fund could substitute a different explanation that offered comparable information.
• Revised Descriptive Parenthetical -
The proposal would revise the explanatory parenthetical following the heading "Annual Fund Operating Expenses. in the fee table to read .ongoing expenses that you pay each year as a percentage of the value of your investment. rather than .expenses that are deducted from Fund assets."
• New Portfolio Turnover Item
- The proposal would add portfolio turnover as an item in the fee table. A fund other than a money market fund would have to disclose its portfolio turnover rate (calculated in the manner currently required by Form N-1A) accompanied by a prescribed explanation of the effect of portfolio turnover on transaction costs and fund performance.
• Revised Treatment of Expense Reimbursement/Fee Waiver Arrangements -
The proposal would formally revise Form N-1A's requirements governing the presentation of expense reimbursements and fee waivers in the fee table in a manner that appears designed to reflect the standards applied by the SEC staff in reviewing statutory prospectus fee table disclosures. A new instruction would provide that .[i]f there were expense reimbursement or fee waiver arrangements that reduced fund operating expenses and that will continue to reduce them for no less than one year from the effective date of the fund's registration statement,. a fund could place two additional captions and related expense information directly below the .Total Annual Fund Operating Expenses. to reflect the effect of those arrangements on fund expenses. (The proposal provides a similar instruction for New Funds, i.e., ones with no financial statements or whose first year financials provide operating results for a period of six months or less, that omits the first condition regarding past expense reduction.) One proposed caption would show the amount of the expense reimbursement or fee waiver; the other would show the fund's net expenses after subtracting the fee reimbursement or expense waiver from total fund operating expenses.

A fund disclosing the effect of an expense reimbursement or fee waiver would also have to disclose the period the expense reimbursement or fee waiver arrangement was expected to continue, and briefly describe who could terminate the arrangement and under what circumstances. The effect of an expense reimbursement or fee waiver that reduced any fund operating expenses during the most recently completed calendar year and that would continue to reduce them for no less than one year from the effective date of the fund's registration statement could also be reflected in the fee table, but only in calculating expenses for the periods for which the expense reimbursement or fee waiver arrangement was expected to continue.

• Principal Investment Strategies, Risks and Performance. The proposal would require a fund to provide the same disclosure regarding its principal investment strategies, risks and performance as required in the current statutory prospectus.

• Portfolio Holdings. The proposal would require a listing of the 10 largest issues in a fund's portfolio as of the most recent calendar quarter end, presented in descending order, with the percentage of net assets represented by each issue. The proposal would require all fully collateralized repurchase agreements to be aggregated and treated as a single issuer. The same requirement would apply to all securities of any one issuer (other than fully collateralized repurchase agreements). The proposal also includes a provision that, under certain conditions, would allow a security to be excluded from the summary disclosure listing of top 10 holdings in a manner similar to the exclusion available under the current requirements for quarterly disclosure of a fund's complete portfolio holdings, which allow a fund’s complete portfolio schedule to list an amount not exceeding 5% of the total value of the portfolio holdings in one amount as "Miscellaneous securities"

• Management. The proposal would require disclosure regarding a fund’s investment adviser(s) and portfolio manager(s) similar to that currently required in the statutory prospectus, i.e., the name of each investment adviser and sub-adviser and the name, title and length of service of the fund’s portfolio managers. The proposal would retain several features of the profile prospectus currently permitted by Rule 498: (i) a fund would not be required to identify a sub-adviser whose sole responsibility is limited to day-to-day management of the fund’s cash instruments unless the fund is a money market fund or other fund with a principal investment strategy of regularly holding cash instruments; and (ii) a fund with three or more sub-advisers, each managing a portion of the fund’s portfolio, would not be required to identify each sub-adviser, except for any sub-adviser that is (or is reasonably expected to be) responsible for managing a significant portion of the fund’s net assets (generally 30% or more of the fund’s net assets). The statutory prospectus would continue to contain the other disclosures regarding investment advisers and portfolio managers currently required by Form N-1A, including information regarding sub-advisers responsible for day-to-day management of cash instruments for a non-money market fund; those disclosures would not, however, appear in the statutory prospectus. summary disclosure section.
• Purchase and Sale of Fund Shares. The SEC’s proposal would require a fund to disclose its minimum initial and subsequent investment requirements, the fact that its shares are redeemable and the procedures for redeeming shares (e.g., on any business day by written request, telephone or wire transfer).

• Tax Information. The proposal would require a fund to state, as applicable, that it intends to make distributions that may be taxed as ordinary income or capital gains or that it intends to distribute tax-exempt income. A fund that holds itself out as investing in securities generating tax-exempt income would be required to provide, as applicable, a general statement to the effect that a portion of the fund’s distributions may be subject to federal income tax.
• Financial Intermediary Compensation. The proposal would conclude the summary disclosure with the following statement discussing the compensation of financial intermediaries, which could be modified provided the modified statement contained comparable information:

"Payments to Broker-Dealers and Other Financial Intermediaries

If you purchase the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may influence the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary's Web site for more information."

(Financial intermediary compensation was an element of a 2004 SEC proposal to adopt broker-dealer point of sale disclosure requirements. In response to a question from SEC representative of the Division of Trading & Markets (formerly the Division of Market Regulation) indicated that in early 2008 the Division intended to make a recommendation to the Commission regarding the reproposal of point of sale disclosure requirements.)

Summary Prospectus – General

The Summary Prospectus could be used to meet certain requirements under the 1933 Act governing the offer and sale of mutual fund shares, some of which must currently be met through use of the statutory prospectus.

Prospectus delivery in connection with mutual fund sales

- a fund could use a Summary Prospectus to satisfy its obligation under Section 5(b)(2) of the 1933 Act to deliver a prospectus in connection with a sale of its shares, subject to conditions regarding (i) the content of the Summary Prospectus, (ii) its delivery to the investor and (iii) investor access to various fund documents (including the statutory prospectus) via the Internet.

Supplemental mutual fund sales literature

- a fund that delivered its Summary Prospectus to an investor could at that time, or subsequently, provide the investor with other communications offering the fund’s shares (‘supplemental sales literature.) without those communications being .prospectuses. within the meaning of the 1933 Act that subject the fund to potential liability to the investor under Section 12(a)(2) of the 1933 Act, provided conditions regarding (i) the content of the Summary Prospectus, (ii) its delivery to the investor and (iii) investor access to various fund documents (including the statutory prospectus) via the Internet were met.

Offers of mutual fund shares

- a Summary Prospectus that met the proposed content requirements could be used to offer fund shares to an investor who had not received a statutory prospectus (i.e., in the same manner as sales literature that complies with Rule 482 under the 1933 Act) without regard to the proposed conditions regarding delivery of a Summary Prospectus or investor access to fund documents via the Internet.

Failure to comply with the conditions applicable to a particular use of the Summary Prospectus, which are discussed in greater detail below, could have significant consequences. For example, a document that failed to meet the content requirements for a Summary Prospectus either by omitting required information or including additional information could not serve any of the purposes described above, which would, at a minimum, raise issues regarding whether the document otherwise complied with the limitations imposed by the 1933 Act on written communications offering mutual fund shares for sale.

Summary Prospectus – Contents

The same summary disclosure that appeared in a fund’s statutory prospectus would constitute the body of the fund’s Summary Prospectus, except that (i) Summary Prospectus performance and portfolio holdings disclosure would be subject to quarterly updating requirements and (ii) Summary Prospectus performance disclosure could omit information required in the statutory prospectus regarding changes in the securities market index used for comparison purposes. A fund’s Summary Prospectus would also include a cover page/introductory information, and could incorporate information by reference from its statutory prospectus, statement of additional information (‘sAI.) and most recent shareholder report. A Summary Prospectus could not include information other than that required or permitted by Rule 498.

Cover page/beginning

. The cover page or beginning of a Summary Prospectus would include specified identifying information about a fund, the approximate date of the document’s first use and specified legends regarding the availability of the statutory prospectus and how to access via the Internet, or otherwise receive (via telephone or e-mail request) a copy of the statutory prospectus and other fund documents. In addition, the legend could indicate that the statutory prospectus and other information were available from a financial intermediary (such as a brokerdealer or bank) through which shares of the fund could be purchased or sold. The legend could also indicate that the Summary Prospectus was intended for use in connection with a 401(k), 403(b) or 457 plan, or a variable life or annuity contract, and was not intended for use by other investors.

Performance and portfolio holdings – quarterly updates

. While a fund would generally need to update its Summary Prospectus as a whole only on an annual basis, the performance and top 10 portfolio holdings information in a Summary Prospectus would have to be updated as of the end of each succeeding calendar quarter not later than one month after the completion of the quarter. A fund could make these updates by sticker or other reasonable means, rather than by reprinting the Summary Prospectus in its entirety.

There would be no requirement to send an updated Summary Prospectus to an investor simply because the investor had received a Summary Prospectus whose performance information was now less current. Specifically, the proposal provides that if a Summary Prospectus satisfied the content requirements of amended Rule 498 at the time it was sent or given, it would continue to satisfy those requirements for purposes of the prospectus delivery and supplemental sales literature enabling functions discussed above until (i) the fund needed to revise the Summary Prospectus for any reason other than the required quarterly updates to portfolio holdings and performance information or (ii) the fund was required to file the annual updating amendment to its registration statement, whichever was earlier. (The Proposing Release notes that this aspect of the proposal would allow a fund to substitute its Summary Prospectus for its statutory prospectus in the annual mailing typically made to existing shareholders after a fund updates its registration statement to reflect financial statements for its most recently completed fiscal year end.)

The quarterly performance and portfolio holdings updating requirement would not apply to corresponding summary disclosure information in a fund’s statutory prospectus or registration statement. Mindful of the potential liability consequences of a mismatch in information between documents related to the same offering, the SEC’s proposal provides that failure to include in a statutory prospectus or registration statement the quarterly updated performance and portfolio holdings information required for a Summary Prospectus would not, solely by virtue of the inclusion of that information in a Summary Prospectus, be considered an omission of material information required to be included in the statutory prospectus or registration statement.

Summary Prospectus – Delivery

A Summary Prospectus being used to satisfy 1933 Act prospectus delivery requirements in connection with a sale of fund shares would need to be sent or given no later than the time of the carrying or delivery of the fund security involved in the transaction, and, if any other materials accompanied the Summary Prospectus, those materials could not be given greater prominence than the Summary Prospectus, nor be bound together with it. Similarly, when a fund wished to provide an investor with a Summary Prospectus in order to be able to deliver supplemental sales literature to the investor, the investor would have to be sent or given a Summary Prospectus prior to or at the same time as the supplemental sales literature; and, if any other materials accompanied the Summary Prospectus, they could not be given greater prominence than the Summary Prospectus or be bound together with it. A fund could provide a Summary Prospectus in electronic form consistent with existing SEC guidance, which typically requires affirmative consent from the recipient.

Summary Prospectus – Internet Access to Fund Documents.

To meet the condition regarding investor access to fund documents via the Internet in connection with certain uses of the Summary Prospectus, the fund’s current Summary Prospectus, statutory prospectus and SAI, and its most recent annual and semi-annual reports to shareholders would have to be accessible, free of charge, at the website address specified on the cover page or at the beginning of the Summary Prospectus.

Website address for required fund documents

.

This address, which could not be the SEC website address, would have to be specific enough to lead investors directly to the statutory prospectus and other required fund documents, rather than to the home page or another section of the website on which the materials were posted. A fund could meet this requirement by maintaining a central site with prominent links to each required document.

Timing of document availability

. The required fund documents would have to be accessible on or before the time that the Summary Prospectus was sent or given. In addition, current versions of the required documents would have to remain available on the website for at least 90 days after (i) the date the mutual fund security in question was carried or delivered if a Summary Prospectus was being relied on to meet prospectus delivery requirements in connection with mutual fund sales or (ii) the date that the supplemental sales literature in question was sent or given if a Summary Prospectus was being relied on in connection with the delivery of supplemental sales literature.

Presentation

. The fund documents made available on the Internet would have to be presented in a format that:

1. was convenient both for reading online and for printing on paper;
2. permitted persons accessing the statutory prospectus or SAI to move directly back and forth between that document’s table of contents and each section in the body of that document referenced in the table of contents; and
3. permitted persons accessing the Summary Prospectus to move directly back and forth between each section of the Summary Prospectus and (i) any section of the statutory prospectus and SAI that provides additional detail concerning that section of the Summary Prospectus or (ii) tables of contents in the statutory prospectus and SAI that prominently display the sections within those documents that provide additional detail concerning that section of the Summary Prospectus.

Ability to retain permanent copies of fund documents

. An investor accessing a website to review the required fund documents would have to be able not only to review those documents online as described above, but also to permanently retain, through downloading or otherwise, free of charge, an electronic version of the Summary Prospectus, statutory prospectus, SAI and shareholder reports. The documents would have to be in a format that met the same requirements as the online versions in terms of (i) convenience for reading online and printing on paper and (ii) the ability to move directly back and forth between the tables of contents of the statutory prospectus and SAI and the sections in those documents that they reference. The electronic version of a required fund document retained by an investor would not need to meet the third condition applicable to online versions of those documents regarding navigation between documents.

Safe Harbor

. The proposed amendments to Rule 498 include a safe harbor provision under which a fund would be deemed to have met the Rule’s condition regarding investor access to required fund documents via the Internet even though the documents were not in fact continuously available during the necessary timeframe, provided the following conditions were met:

1. the fund had reasonable procedures in place to ensure that the Internet access condition was met; and
2. the fund took prompt action to ensure that the necessary Internet access was restored as soon as practicable following the earlier of the time it knew or reasonably should have known that the Internet access condition was not being met.

The Proposing Release notes that the impetus for the safe harbor was the SEC’s recognition that there might be times when, due to system outages or other technological issues, a fund would temporarily be unable to comply with amended Rule 498’s Internet access requirements, despite the fund’s best efforts. This safe harbor would not be available to a fund that repeatedly failed to prolonged period of time.

Summary Prospectus - Incorporation by Reference

The SEC’s proposal would address one of the major liability concerns expressed regarding the profile currently permitted under Rule 498, by allowing a Summary Prospectus, unlike the profile, to incorporate by reference information contained in a fund’s statutory prospectus, SAI and its most recent shareholder report. Under amended Rule 498, information properly incorporated by reference into a Summary Prospectus would be treated as having been conveyed to a person who received the Summary Prospectus not later than the time of receipt for purposes of Rule 159 under the 1933 Act, which addresses the scope of information treated as having been provided to the purchaser of a security when determining whether there has been a material misstatement or omission resulting in liability under the anti-fraud provisions of Section 12(a)(2) and Section 17(a)(2) of the 1933 Act¹ (The Proposing Release also indicates that the SEC believes that a person that provided an investor with a Summary Prospectus in good faith compliance with amended Rule 498 would be able to rely on Section 19(a) of the 1933 Act, which provides that the liability provisions of the 1933 Act do not apply to any act done or omitted in good faith in conformity with any SEC rule, against a claim that a fund’s Summary Prospectus did not include information disclosed in the fund’s statutory prospectus, whether or not the Summary Prospectus incorporated the statutory prospectus by reference.)

Limits on incorporation by reference

. A Summary Prospectus could not incorporate by reference any of the information required to be included in its cover/opening disclosures or in response to the summary disclosure requirements, nor could it incorporate information from any source other than those enumerated above. Information could be incorporated by reference only to the specific document containing that information, and not by reference to a document that incorporates by reference to a second document containing the information in question (e.g., a Summary Prospectus could not incorporate by reference a fund’s SAI simply by incorporating by reference the fund’s statutory prospectus that incorporates the SAI by reference, but would have to separately incorporate the SAI by reference).

Conditions for incorporation by reference

.

To incorporate information by reference from the permitted sources, a fund would have to (i) include legends on the cover or at the beginning of the Summary Prospectus that explain the use of incorporation by reference and how to access the documents from which information was incorporated and (ii) provide Internet access to required fund documents in the manner discussed above. A fund that met all the conditions for incorporation by reference into its Summary Prospectus would not have to send or give the incorporated information together with the Summary Prospectus. The Proposing Release indicates that although a fund incorporating information by reference into its Summary Prospectus would be required to send a paper or electronic copy of incorporated information upon request, failure to do so would not preclude or nullify the incorporation by reference, but would be a violation of SEC rules.

Delivery of Paper and Electronic Copies of Statutory Prospectus and Other Fund Documents

The SEC’s proposal would require that a fund (or a financial intermediary through which fund shares could be purchased or sold) send, at no cost to the requestor and by U’s. first class mail or other reasonably prompt means, a paper copy of the fund’s statutory prospectus, SAI and most recent annual and semi-annual shareholder report (the fund documents covered by amended Rule 498’s Internet access requirements) to any person requesting one, within three business days after receiving the request. A corresponding requirement would apply to a request for an electronic copy of those documents. Similar to the situation for incorporation by reference, failure to meet these requirements to send paper or electronic copies of fund documents upon request would not prevent the use of a Summary Prospectus to (i) satisfy 1933 Act prospectus delivery requirements in connection with mutual fund sales or (ii) enable the delivery of supplemental sales literature, but would, in each case, be a violation of SEC rules.

Filing a Summary Prospectus with the SEC

A fund’s Summary Prospectus would have to be filed with the SEC as part of the fund’s registration statement but would not be deemed part of the registration statement for purposes of Section 11 of the 1933 Act, which addresses liability for a false registration statement. Corresponding information in the statutory prospectus (i.e., the summary disclosure section, excluding the performance and portfolio holdings disclosures in the case of a subsequently updated Summary Prospectus) would, however, be part of the registration statement.

Prototype Summary Prospectus

Along with the Proposing Release, the SEC has made available a prototype Summary Prospectus that is designed to illustrate the features of its proposal.

Elimination of Option to Provide Separate Purchase and Redemption Procedures Documents

In light of the fact that amended Rule 498 would permit a fund to deliver a document describing its purchase and redemption procedures along with a Summary Prospectus, the SEC is proposing to eliminate the Form N-1A provisions that allow a fund to present the requested information about purchase and redemption procedures in separate documents rather than in its statutory prospectus and SAI. The SEC’s proposal would not otherwise change the information that Form N-1A requires about a fund’s purchase and redemption procedures (except as to location in the case of the information that must appear in the summary disclosure section of the statutory prospectus.)

Compliance Date

If the SEC adopts the proposed amendments to Form N-1A, it expects to require funds to comply with the amendments in all initial registration statements on Form N-1A, and all post-effective amendments that are annual updates to effective registration statements on Form N-1A, filed six months or more after the effective date of the amendments. adoption. In addition, the SEC expects to allow the use of a Summary Prospectus to satisfy an obligation to deliver a statutory prospectus only if a fund is in compliance with the amendments to Form N-1A.

Request for Comment

The Proposing Release requests comment on a wide range of topics related to the SEC’s proposal and includes a special request for comments from investors. Comments must be received by the SEC on or before February 28, 2008. Some of the SEC’s specific requests for comment are as follows:

Summary Disclosure Requirements

• Should the SEC impose formatting requirements on the summary disclosure section of the statutory prospectus, such as limitations on page length (e.g., 3 or 4 pages) or required font sizes or layouts?
• Should the performance section of the summary disclosure requirements include additional performance measures, such as past performance adjusted for the impact of inflation?
• Should a fund that is marketed directly to investors be permitted to eliminate the financial intermediary compensation disclosure?
• If funds are required to update performance and portfolio holdings information in Summary Prospectuses on a quarterly basis, should amended Rule 498 include any additional safe harbors or a cure provision to address situations where a Summary Prospectus that lacks a required quarterly update has been inadvertently distributed?
• Should funds be permitted to modify the disclosure regarding financial intermediary compensation to reflect the fact that some transactions may be initiated by an investor and not on the basis of a financial intermediary’s recommendation?
• Should the SEC require financial intermediaries to make information about the compensation they receive from mutual funds available on their websites?

Prospectus Delivery

• Should the SEC permit mutual funds to meet their prospectus delivery obligations by filing the statutory prospectus with the SEC and/or by posting it on line without giving or sending a Summary Prospectus?
• Should mutual fund investors have the ability to opt out of Rule 498 as amended on a permanent basis and always receive a paper copy of any statutory prospectus?
• Should the SEC impose additional requirements to encourage the prominence and separateness of a Summary Prospectus, when provided in paper, at an Internet website or by e-mail, such as requiring that the Summary Prospectus be at the top of a list of documents provided electronically, or on top of a group of documents provided in paper form?

Internet Access

• Should the SEC make electronic data tagging of risk/return summary information in the Summary Prospectus or statutory prospectus a condition for reliance upon amended Rule 498?

• Should funds that have technological issues making their documents available on the Internet be required to disclose on their websites that the information was not available for a time in the manner required by amended Rule 498 and explain the reasons for that failure to comply?
• Should the SEC require that funds or other persons using a Summary Prospectus to satisfy 1933 Act prospectus delivery requirements retain additional records beyond those required by the SEC’s current rules, such as proof that the statutory prospectus, SAI and annual and semi-annual reports were available on the Internet and records of the dates when documents were requested by investors and subsequently sent?

Footnotes

1 Under Section 12(a)(2) of the 1933 Act, the seller of a security has liability to purchasers of that security for offers or sales by means of a .prospectus. (any prospectus, notice, circular, advertisement, letter or communication, written or by radio or television, which offers any security for sale or confirms the sale of any security) or oral communication that includes an untrue statement of material fact or omits to state a material fact that makes the statements made, based on the circumstances under which they were made, not misleading. Section 17(a)(2) of the 1933 Act, which is typically cited in SEC enforcement proceedings, is a general antifraud provision that makes it unlawful for any person in the offer and sale of a security to obtain money or property by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.

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