Responding to the spate of mutual fund scandals, the House of Representatives overwhelmingly approved legislation on Wednesday aimed at deterring trading abuses and fund mismanagement, improving the disclosure of fee information and increasing the independence of fund boards.
The legislation, approved by a vote of 418 to 2, comes after the string of investigations and fraud cases against many of the nation’s largest fund companies. Many lawmakers, particularly Democrats, said they were voting for the measure in the hope that it would be strengthened later. The action now moves to the Senate, where some measures have been introduced but where leaders do not expect consideration of a bill before next year.
No lawmaker rose to criticize the bill in the House, although both Democrats and Republicans lamented that it had been watered down from earlier versions. It was an indication of the continued influence of industry lobbyists that the legislation was significantly changed from the versions introduced earlier this year.
In many but not all respects, the legislation approved by the House did not go as far as the regulatory package that officials at the Securities and Exchange Commission say they will adopt in the coming months.
Representative Richard H. Baker, the Louisiana Republican who was the main author of the measure, said that the bill “goes a long way” toward resolving the problems of the industry and its oversight but said he would also seek to make it stronger by restoring some provisions that had been watered down.
“This bill is a substantive first step toward reinforcing bedrock ethical principles of the marketplace and restoring investor confidence, but there is still more work to be done,” Baker said.
The two members of the House, both Republicans, who voted against the measure were Jeff Flake of Arizona and Ron Paul of Texas.