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SEC Eyes More Fund Trade Info

Nov 26, 2003 | New York Daily News

The Securities and Exchange Commission is moving toward requiring all mutual fund managers to disclose trading in the funds they oversee.

Meanwhile, the SEC, headed by William Donaldson, and state Attorney General Eliot Spitzer have already begun quietly collecting trading records for the last few years of fund managers and company execs.

The regulators' goal is to root out other cases of quick trading, or market timing.

A new policy requiring disclosure of trades would "directly confront the situation where insiders were timing to the detriment of the long-term share owners," said Burt Greenwald, a Philadelphia-based mutual fund consultant. "Sunshine is the best disinfectant."

Probes of the $7 trillion mutual fund business have shown that execs at companies including Putnam and Strong have quickly traded in and out of their own funds.

The SEC plans to seek comment on a host of changes to mutual fund regulation next week.

The Investment Company Institute, the mutual fund's biggest trade group, endorsed many of the changes in the works at the SEC.

"The ICI's board of governors has endorsed the idea of taking the existing code of ethics and expanding it to cover short term trading in and out of mutual funds by employees of the companies that sponsor the funds," said John Collins, a spokesman for the ICI.

Meanwhile, Sens. Jon Corzine (D.-N.J.) and Chris Dodd (D.- Conn.) introduced a bill to require mutual fund execs to disclose all fees and certify the accuracy of their funds' financial statements.

The bill would establish independent fund boards, chairmen, nominating committees and independent audit committees that conform to the same requirements at public companies.

The senators also proposed a study to create a new independent regulator, called the mutual fund oversight board.

"It's absolutely imperative that we guarantee a fair and level playing field to ensure greater investor confidence," said Dodd in a statement.

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