Three U.S. Senators have introduced new legislation aimed at reforming the $7.4 trillion mutual fund industry, a bill that not only would stamp out abusive trading practices but also overhaul the hidden fee structure imposed on shareholders.

Sponsored by Sen. Peter Fitzgerald (R-IL), Sen. Carl Levin (D-MI) and Sen. Susan Collins (R-ME), chairman of the Senate Governmental Affairs Committee, the new bill is called the Mutual Fund Reform Act of 2004. It would require a total fund expense ratio to include portfolio transaction costs and rationalize 12b-1 fees by treating broker compensation as a shareholder expense.

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