SEC Chairman William Donaldson asked SEC staff to review the information mutual funds must give investors and provide suggestions on how to improve the disclosures, Meyer Eisenberg, deputy general counsel and acting director of the SEC's division of investment management, said today at a hearing before the House Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises.
Mr. Donaldson has also asked SEC staff to examine how the agency can make better use of technology, including the Internet, in ensuring that mutual fund investors get meaningful information about their investments, Mr. Eisenberg said. Staff members are drafting a proposal to ensure investors get useful information about the costs mutual funds incur in buying and selling securities, including brokerage commissions, soft dollars and other transaction costs, he said.
The SEC is also assessing the future of regulation 12(b)-1, a securities rule which permits mutual fund companies to use fund assets to pay for promoting the sale of shares. But because mutual fund companies now typically substitute 12(b)-1 fees for up-front sales loads, Mr. Donaldson has requested that SEC staff examine whether such fees should be eliminated.
