Fund firms may soon have more data on how their advertising efforts change consumer behavior. Whether that research would be good news or bad news is not yet clear. The research would be used to determine additional areas for regulation of mutual funds and is part of the recently passed Senate version of the Wall Street reform bill dubbed Restoring American Financial Stability Act of 2010 (RAFSA).

Whether the language will survive the reconciliation process is not known.

Buried in the Senate version of financial services reform [s.3271] is a provision that calls for The Comptroller General to study mutual fund marketing (See the full text of s.3271, Section 917).

The report would be due one year from the date of enactment of the bill.

The section explicitly calls for the Comptroller to identify "existing and proposed regulatory requirements for open-end investment company advertisements."

It also will explore how the mutual fund industry uses past performance data, funds that have merged, and incubator funds as well as "the impact of such advertising on consumers."

The Comptroller would then make recommendations "to improve investor protections in mutual fund advertising and additional information necessary to ensure that investors can make informed financial decisions when purchasing shares."

The House version of the bill sponsored by Barney Frank (Dem-Massachusetts) does not contain a similar provision. That is called the Wall Street Reform and Consumer Protection Act of 2009 (read the full text on Thomas [pdf]). 

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