The US Securities and Exchange Commission (SEC) Combats Greenwashing with The New Names Rule

On September 2023, the SEC updated some amendments to the Investment Company Act "Names Rule" which aims to prevent fund names from misleading investors about a fund's investments and risks. The amendments strengthen the rule to align with developments in the fund industry over the past 20 years. The changes require more funds to adopt an 80 percent investment policy if their name suggests a focus on a particular type of investment, for example, terms such as " Growth" or " Value". The amendments also mandate a quarterly review of a fund's portfolio assets for compliance with the investment policy, with a 90-day time frame for corrective action. Additionally, it includes enhanced disclosure requirements for terms used in fund names and additional reporting and recordkeeping requirements for funds regarding compliance with the names-related regulatory requirements.