This latest, quite forceful, intervention by the SEC looks set to raise the bar significantly on the clarity and fidelity of definition and description of investment funds. At first glance, this sounds very helpful to investors, especially less sophisticated ones, and is aligned with recent efforts by the UK FCA and ASA to challenge greenwashing by financial institutions. 

However, there is a risk that this goes further and has the effect of dumbing down or polarising the range of products on offer, in a way that reduces investor choice and prevents investment firms from offering hybrid products that do not fit neatly into categories, but might meet the requirements of a specific set of investors. This might be an example of a market where a regulatory sandbox, or close and collaborative cooperation between regulator and industry rather than aggressive rule setting, would deliver better outcomes to the market.