Wielding their $1 trillion clout, state pension leaders and treasurers partnered with New York Attorney General Eliot Spitzer Thursday to tear into the SEC’s proposed fund reforms. (See release.)

Announcing their new Mutual Fund Protection Principles at a press conference in New York, Spitzer and three state chief investment officers from his state, as well as North Carolina and California, attested that the SEC’s proposed reforms, announced just the day before, do not go far enough.

Among the further reforms that they want are fund disclosure of stock holdings, trading costs and a full accounting of soft-dollar expenditures – as well as the dollar amount of fees that fund companies and/or their selling partners automatically debit from investor accounts.

These new principles would apply to every single fund managed by state and public pension funds, including 401(k)s, 403(b)s and 457s. While the officials did not name 529 college savings plans, in most states, these fall under the purview of treasurers. Present yesterday at the New York press conference was New York State Comptroller Alan Hevesi, California Treasurer Phil Angelides and North Carolina Treasurer Richard Moore.

"The illegal actions that occurred at mutual fund companies must be curbed and reforms put in place immediately," Hevesi said. "Otherwise, we risk further eroding the confidence of both small and large investors."

Hevesi went on to make note of the damage already done by the corporate scandals unearthed during the bear market, and the importance of the nation’s continued faith in its capital markets.

Meanwhile, Rep. Richard Baker (R-La.), sent a letter to the SEC yesterday, also saying its reforms do not go far enough and that Congressional legislation is needed.

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