.jpg)
"SIA welcomes these new pro-investor proposals by the SEC. These guidelines are intended to enhance investors' confidence in the industry by ensuring that they can easily understand disclosures of sales costs, potential conflicts of interest, and all pertinent information when purchasing mutual funds," said SIA Chairman Richard Thornburgh, chief risk officer, Credit Suisse Group. "In our congressional testimony in November 2003, the industry supported reforms to improve disclosures of fees, performance, and any potential conflict of interest to ensure that investors fully understand a fund's costs and performance. We look forward to working with the commission to implement these proposals."
SIA participated in a recent regulatory and industry task force that developed proposals to ensure that clients get the sales-fee discounts that they are entitled to receive. Moreover, the association supported the SEC's new disclosure requirements issued in December for breakpoints, which are the investment levels at which discounts become available to clients, to facilitate the implementation of the task force's recommendations.
Today's proposals would require firms to provide investors with specific information about administrative and distribution-related costs and conflicts prior to purchasing these securities, and to include this information on confirmation slips. In addition, investment advisers would be required to adopt codes of ethics that establish standards of conduct for advisory personnel, safeguard material nonpublic information about client transactions, and address conflicts that arise from personal trading by advisory personnel. Other rules proposed today would require the chairman of a mutual-fund company's board to be "independent." It also would increase the percentage of outside directors from a majority to 75 percent. (More information about the proposals is available at www.sec.gov.)
"An important part of SIA's efforts is also investor education. Through our Web site and other initiatives, we help investors to understand mutual-fund products," said Thornburgh. (SIA's investor education Web site is at www.pathtoinvesting.com.)
SIA President Marc Lackritz, in testimony before Congress in November (http://www.sia.com/testimony/html/mlackritz11-18-03.html), stressed the importance of treating all investors fairly in mutual-fund transactions and called for appropriate regulatory action to deal with market timing, late trading, and other issues.
