In a speech to the Mutual Fund Directors Forum, Securities and Exchange Commission Chairman William Donaldson unraveled a broad set of measures that the federal agency plans to undertake to regulate the mutual fund industry more closely.

Donaldson emphasized the need to make mutual fund disclosure documents simpler. "Few would disagree that many mutual fund disclosure documents are too long and complicated," he said. "Investors need disclosure that is clear, understandable and in a usable format in order to make informed decisions," he added. Although he didn't provide a timetable, Donaldson said his staff was working on making disclosure documents less overwhelming for investors.

He also noted that the SEC is working on several other issues simultaneously. One of them was whether to make it mandatory to charge a 2% redemption fee on investors who withdraw money after buying shares. Another was coming up with recommendations to prevent soft-dollar arrangements, in which fund managers promise stock trades and commissions to traders in return for research and other benefits such as newspapers or access to computer systems.

Donaldson said the SEC staff is also still looking into how to combat late trading and is considering technological controls and third-party audits as preventative measures.

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