finra

FINRA

 

 

FOR RELEASE:
CONTACTS:
Wednesday, May 12, 2004
Nancy Condon 202-728-8304
Herb Perone 202-728-8464

 


 

NASD's Glauber Announces Mutual Fund Task Force

Baltimore, MD—NASD Chairman and CEO Robert Glauber today announced the formation of a Mutual Fund Task Force, whose mission will be to identify and recommend ways to bring greater transparency to mutual fund costs and distribution arrangements.

 

The task force is the product of discussions between the Securities and Exchange Commission (SEC) and NASD staffs and responds to rule proposals and requests for comment by the SEC on ways to improve disclosure of mutual fund costs and issues regarding mutual fund distribution arrangements. The members of the task force will represent a cross-section of the broker-dealer and mutual fund communities. It's expected that task force members will be appointed and begin work by the end of June.

 

"Looking at mutual funds themselves and the practices used to sell them, a major part of the solution to the appalling abuses of the public trust we've seen recently is increased transparency," Glauber told more than 500 attendees in a speech at the 2004 NASD Spring Securities Conference in Baltimore, MD.

 

"I have a fundamental belief that more information is better than less," Glauber said. "One of the bedrock principles of our free market system is that all participants have access to information about prices and costs that will influence their decisions. When this information is hidden or distorted, investors are not able to make the best-informed decisions about where to invest their money.

 

"I believe the mutual fund industry's own self-interest will be served by better disclosure of costs and fees and payments for distribution, as well as better governance of the funds themselves," Glauber said. "These changes will help the industry retain its customers and attract new ones."

 

The work of the Mutual Fund Task Force will proceed in two phases to provide timely input to the SEC's rulemaking process. In the first, it will consider mutual fund portfolio transaction costs - including directed brokerage arrangements, soft dollars and disclosure. It's expected the task force will report back to the SEC in the next several months.

 

In the second phase, task force members will focus on distribution arrangements, including 12b-1 fees and revenue sharing. Phase Two will include a comprehensive view of mutual fund distribution and will require a longer time commitment than Phase One.

 

NASD is the leading private-sector provider of financial regulatory services, dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services. NASD touches virtually every aspect of the securities business—from registering and educating all industry participants, to examining securities firms, enforcing both NASD rules and the federal securities laws, and administering the largest dispute resolution forum for investors and registered firms. For more information, please visit our Web Site at www.nasd.com.