Overwhelming House Vote For Mutual Fund Reform
Mutual fund reform legislation approved overwhelmingly by the House of Representatives represents only the first step toward the goal of protecting mutual fund investors, says a co-sponsor of the legislation.
Rep. Richard Baker, R-La., who chairs the House Financial Services Subcommittee on Capital Markets, says he will work with the Senate to develop the strongest possible reform bill.
Bakers legislation, H.R. 2420, passed by a 418-2 vote, would mandate increased disclosure and transparency of mutual fund costs and reform mutual fund governance.
Under the legislation, mutual funds would have to disclose estimated operating expenses based on a hypothetical $1,000 investment, disclose soft dollar arrangements and revenue-sharing agreements, and explain portfolio turnover rates in a way that facilitates comparisons by investors.
Mutual funds also would have to disclose policies and procedures on proxy voting, disclose the structure of portfolio manager compensation and disclose any holding fund managers have in the funds they manage.
H.R. 2420 also requires that two-thirds of all board directors be independent.
In addition, the legislation bars the same person from managing both mutual funds and hedge funds.