Bipartisan legislation introduced in the Senate would ban soft dollars and directed brokerage and 12(b)-1 distribution fees, and require mutual funds to disclose all costs to shareholders. The Mutual Fund Reform Act, introduced Monday, would also direct the SEC to improve disclosure of mutual fund costs to investors. The bill is co-sponsored by Sens. Peter Fitzgerald, R-Ill., chairman of the Governmental Affairs Subcommittee on Financial Management, the Budget and International Security; Carl Levin, D-Mich., and Susan Collins, R-Maine.
Matthew P. Fink, president of the Investment Company Institute, said: "We are nevertheless concerned that the bill contains many ill-defined new legal standards that could change mutual funds' essential structure. These changes could produce major dislocations and unintended consequences that would deter innovation, diminish competition, breed litigation and - as a result - harm current and future generations of mutual fund shareholders."