After postponing a markup session for the mutual fund transparency bill earlier this month, the
The Mutual Funds Integrity and Fee Transparency Act of 2003, designed to bring greater transparency and corporate governance regulations to the $6.5 trillion mutual fund industry, has been Rep. Richard Bakers (R-La.) darling as he has tried to bring about reform in the sector. Although there have been no major scandals in the mutual fund industry, investor confidence has been severely shaken in the wake of the Enron and Tyco fiascos, and Baker has been pushing for increased legislation in this industry.
The
Instead of providing individualized statements to investors detailing exact dollar amounts they are paying in fees, funds would only now be required to provide fee amounts paid on a basis of a hypothetical $1,000 investment. ICI had suggested such a change.
The original version of the bill also required that the chairman of a funds board of directors be independent. However, that provision was deleted and replaced with an amendment giving boards of directors the option to elect an independent chairman.
The bill would also require new recordkeeping of soft dollar transactions, which would help shed some light on possible conflicts of interests. It would also mandate the notification in brokerage account statements that fees have been deducted, as well as require the disclosure of portfolio turnover rates so that investors can easily compare the rates to those of other funds.
Critics of the fund industry are sure to be unsatisfied with the amendments, as many of the changes lessen the measures originally proposed by Bakers bill (see