Saying that the Securities and Exchange Commission "simply can’t afford to wait for other storms to break," the commissions voted unanimously today to ask the fund industry to install formal self-regulation procedures in place. The most notable of these is the creation of a self-regulatory agency along the lines of the National Association of Securities Dealers for the brokerage industry.

The $6 trillion mutual fund industry’s expansion to more than 5,000 investment companies and 7,000 investment advisors "has exceeded our resources," Commissioner Robert Colby said. Inspections by the SEC every five years are inadequate protections for investors, Colby said.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.