CU Commends House Passage on Regulation of Mutual Funds
FOR IMMEDIATE RELEASE
November 19, 2003
Contact: Sally Greenberg or
Susan Herold at (202) 462-6262
Washington DC–Consumers Union today commended the US House of Representatives for passage of HR 2420, the Mutual Funds Integrity and Fee Transparency Act of 2003. Recent revelations about mutual fund managers promoting their own interests over those of their shareholders and the fact that 95 million Americans have placed their money – and their trust – in mutual funds, provide strong incentives for reform.
HR 2420 addresses a number of important issues, including:
● Improved fee information and fee transparency for investors;
● Disclosure to investors of revenue sharing arrangements, directed broker arrangements, and soft dollar arrangements that are full of potential for conflicts of interests;
● Banning market timing for fund insiders and higher redemption fees for trades that occur in a short time period to discourage market timing;
● Prohibiting fraudulent trading of fund shares by insiders;
● Mutual fund governance, reducing to one-third the number of non-independent members who may serve on the board of a registered company.
“While there is certainly more work to do in this area of critical importance for average investors,” said Sally Greenberg, Senior Counsel for CU, “including insuring that Congress considers establishing a mutual fund oversight board with inspection, enforcement and rulemaking authority over the mutual fund industry, stronger rules for independent boards and other changes we believe that adoption of HR 2420 is an important first step in the effort toward reforming this industry and protecting the interests of millions of investors and we commend the House for taking prompt action before adjournment.”
Consumers Union, publisher of Consumer Reports magazine, is an independent nonprofit testing, educational and information organization serving only the consumer. We are a comprehensive source of unbiased advice about products and services, personal finance, health, nutrition, and other consumer concerns. Since 1936, our mission has been to test products, inform the public, and protect consumers.