SEC Backs Legislation to Ban Products Aimed at Military

The Securities and Exchange Commission testified last week before the Senate Banking Committee that it approves legislation that would ban the sale of mutual funds aimed at military personnel, the Associated Press reports.

Lori Richards, head of the SEC's office of compliance, inspections and examinations, said that after conducting broad sweeps of companies that sell mutual funds to military personnel, she found that many charge excessively high front-end sales loads. In some cases, these sales loads reduce an investor's initial investment by as much as half, Richards said.

Further, many fund companies selling to military personnel require them to sign a contract agreeing to periodic payments, whereas this is not typically a condition of other mutual funds, she said.