House Amendment Bars Closed Fund Marketing Charge

February 25, 2004 ( - Lawmakers on Wednesday gave thumbs up to an amendment barring mutual fund firms from charging investors a marketing fee for closed funds.

The US House of Representatives Financial Services Committee approved the amendment   to a bill intended to give the US Securities and Exchange Commission (SEC) more power to police the securities industry, Dow Jones reported. The committee is expected to work throughout the afternoon to debate further amendments before a final vote.

The panel also resolved an issue regarding the balance of enforcement power between state attorneys general and the SEC that had been delaying consideration of the bill.

Language that critics said would have effectively closed down hard-charging attorneys general like New York’s Eliot Spitzer was replaced with a provision to study the matter. Spitzer has been a major force in the ongoing federal/state probe of abusive mutual fund trading practices – notably market timing and late trading.

Among the amendments yet to be considered is one that would require that the chair of a mutual-fund board be independent of the mutual-fund company.