More than six decades after Congress approved a cornerstone of the mutual fund business formally known as The Investment Act of 1940, shareholder advocates are urging legislators to for new rules aimed at safeguarding novice investors, according to Dow Jones Newswires.
Barbara Roper, director of investor protection for the Consumer Federation of America, told the Senate Banking Committee yesterday that Congress needs to step in where the Securities and Exchange Commission has failed as a guarantor of transparency into soft-dollar arrangements and other now-shadowy factors affecting mutual fund performance. She also called for called for stricter definitions of independent mutual fund directors and better disclosure of complex investment fee structures.
Roper, who stopped short of insisting on massive overhauls on the scale of what the 2002 Sarbanes-Oxley Act meant to the accounting industry, is only part of an increasingly boisterous chorus lambasting the SEC for kowtowing to pressure from asset managers. William Lutz, a professor at Rutgers University, criticized the SEC for dismissing shareholder advocates' pleas for clear and concise mutual fund fee reporting.
Some members of the powerful mutual fund industry conceded a number of the advocates' points but defended other increasingly controversial practices, such as soft-dollar arrangements and charging 12b-1 fees. Robert Pozen, the non-executive chief officer of MFS Financial Services, noted that MFS plans to introduce stepped-up fee reports for individual investors later this year.
