As the
However, the ICI did not offer a position on the disclosure of portfolio manager compensation, portfolio transaction costs, revenue-sharing agreements, or fund brokerage practices, only calling on the
ICI Chairman Paul Haaga testified that the industry would be willing to provide investors with dollar amounts of the fees that they pay, but rather than give investors individualized reports, he suggested that funds show fees based on a $10,000 investment. Haaga noted that by providing consistent figures, investors would be able to compare fees across various funds.
The
The ICI chairman told Congress that soft dollars should be investigated. "We believe this is one of the most important issues addressed by the bill," Haaga said. "We believe it is now time for a review of the rules governing soft dollars."
The GAO report asked the SEC to look into, and disclose, whether soft dollars encourage fund companies to trade shares more frequently than they normally would, or with brokerages that charge higher fees, thereby increasing shareholder costs. Furthermore, some fund companies might use soft dollars to reduce their own expenses, the GAO said.
Haaga also testified that the mutual fund industry supports the Sarbanes-Oxley standards for audit committees, and agrees that these standards should also apply to funds. Further, the industry concurs that people with business relationships with management or who are related to officers or board members of a fund should not be allowed to serve as independent directors, Haaga said.
Haaga disagreed, however, with the bills requirement that the chairman of the board be an independent director. Independent directors regularly meet in executive sessions, he said. "Not only is it unnecessary, but having an independent chairman could actually result in a less effective board," he said.