WASHINGTON (HedgeWorld.com)–The question is not whether the Senate will take up a bill to reform the mutual fund industry this year, but whose bill.
One version likely to get a lot of attention in coming weeks is proposed by Sen. Jon S. Corzine (D–N.J.), formerly the chief executive of Goldman Sachs Group Inc. This bill is co-sponsored by both of Connecticut’s Democratic senators, Joseph Lieberman and Christopher Dodd.
On the floor of the Senate, Nov. 25, when Senator Corzine introduced the bill, he said that he had been dismayed to see such names as “Putnam and Canary Capital … become synonymous with Enron, Tyco and WorldCom in terms of the financial harm inflicted upon investors, undermining their confidence and trust in America’s financial markets.”
His bill, Mutual Fund Investor Confidence Restoration Act of 2003, covers much the same ground as the Mutual Fund Transparency and Integrity Act of 2003, which passed the House of Representatives Nov. 19 with 418 votes.
Like the House Act, HR 2420, which also has been referred to the Senate Banking committee in the form in which the House passed it Previous HedgeWorld Story, the Corzine-Dodd bill, S. 1971, would require the Securities and Exchange Commission to issue rules eliminating the stale-pricing problem that traders have exploited; would increase transparency requirements as to mutual fund fees and costs, inclusive of soft-dollar arrangements; and would strengthen the independent directors of fund management firms.
More controversial, even in today’s pro-reform climate, is a provision that both HR 2420 and S. 1971 possess that would prohibit mutual fund managers from jointly managing a hedge fund.