Regulation

In its zeal to apply a free market philosophy to the Securities and Exchange Commission, the Bush administration created an environment where the agency's enforcement staff was unable to take definitive policy positions or bring enforcement actions, according to Mercer Bullard, associate professor of law at the University of Mississippi School of Law.Testifying on May 7 at a Senate Banking subcommittee hearing, Mercer said that the problems at the SEC reflect a state of "deregulatory capture," where the commission was unaware of and unable to respond to many enforcement matters before they surfaced.

Risk management has taken on a whole new meaning after the crazy behavior of markets during the past 18 months.

The Securities and Exchange Commission is considering making significant changes to money market mutual funds because there is still a danger that these funds could be unable to meet redemptions when investors begin to step off the sidelines en masse and move back into equity markets.

Mary Schapiro, chairman of the Securities and Exchange Commission, bridled against the proposal that the government create a consumer financial protection agency. Evidently, the SEC wants to maintain its regulatory control over mutual funds.

People investing for retirement in mutual funds should not pay capital gains taxes until those shares are sold, according to Senators Mike Crapo (R-Idaho) and Tim Johnson (D-South Dakota). To keep retirement savings earning more money for a longer period of time, the senators have introduced the GROWTH (Generating Retirement Ownership Through Long-Term Holding) Act, which the Investment Company Institute supports.

The Obama administration is considering forming a regulatory commission to protect consumers against predatory sales and practices by mutual funds, mortgage lenders and credit card companies.

The Securities and Exchange Commission is holding a public seminar on June 10 to help companies and preparers comply with new financial reporting rules.

The investment community is hopeful that with a little tweaking, target-date funds could be the ideal solution for getting apathetic investors into an age-appropriate asset allocation.

With pension plans headed for virtual extinction, the 401(k) will inevitably become the sole qualified retirement savings vehicle in the nation, and as such, the defined contribution model must be vastly improved, speakers at the Investment Company Institute's General Membership Meeting in Washington said.

Those hoping for a return to the good old days of self-regulated, self-correcting markets need to face reality: Those days are over.