Even as the SEC tries to improve disclosure in the aftermath of the mutual fund trading scandals, it may be burdening its investors with more information than needed, and in the process, driving up the cost of compliance to companies, according to an article in Forbes.

"It's a disclosure stampede," says James Riepe, vice chairman of fund company T. Rowe Price. "Everyone with an agenda has gotten their disclosure included, so fund companies and investors are overwhelmed." Investor advocate Mercer Bullard of Fund Democracy says, "the SEC has said prospectuses already are overburdened. Adding more to them now won't help shareholders and will actually impede their understanding."

Even though T. Rowe Price wasn't implicated in any of the fund scandals, it had to add five pages to its Mid-Cap Growth Fund prospectus, bringing it to 44 pages, to explain policies regarding rapid trading, selective disclosure and other scandal-related issues. The company ended up mailing out an extra 40 million pages last year at a cost of $800,000.

Mutual fund companies complain that much of the improved disclosure that is going out to investors is actually aimed at planners, brokers and the media. Twice a year investors will now receive detailed discussions of directors' reasons for renewing their funds' contracts with the advisory firms that run them. That alone will require mailing 231 million extra pages at a cost of $6.2 million, the SEC figures.

That money is more likely than not going to come from investors' pockets. For instance, Thornburg Investment Management, which has $13 billion assets under management with a dozen mutual funds, will pay for a part of the cost of higher legal and accounting fees and fatter prospectuses and pass on an extra 0.03% in administrative fees annually to investors.

The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.

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