Administration March 6, 2005

MA Regulator: SEC 'Needs To Do More'

June 15, 2004 (PLANSPONSOR.com) - William Galvin, secretary of the Commonwealth of Massachusetts and an active player in the ongoing mutual fund trading scandal, on Tuesday issued a public demand for tougher rules governing hedge and mutual funds.

Reported by

Fred Schneyer

Galvin, the state’s top securities regulator, challenged his federal counterparts at the U.S. Securities and Exchange Commission (SEC) to adopt broader disclosure requirements for hedge funds, a ban on soft-dollar payments by mutual funds, and fuller exposure of the fees mutual funds charge investors, the Boston Business Journal.

The state official said the SEC and Congress should endorse rules that would require hedge funds register with the federal agency. “Federal regulators and Congress need to pay more attention to (hedge funds) as small investors get involved,” Galvin said. “The SEC in particular needs to do more.”

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Those rules are under consideration but have not been approved by the SEC, although they are expected to be implemented, experts say (See SEC Staff Formalizes Hedge Fund Recommendations ). Galvin, in a separate interview also said the SEC should prohibit mutual fund managers from simultaneously overseeing hedge funds, a practice that currently is legal.

Galvin also called on Congress and the SEC “to take a hard look at (mutual fund) fees.”

Galvin, whose office has wrangled settlements from Putnam Investments and other mutual fund firms involved in the market-timing scandal (See Putnam Inks $110M State/Federal Market Timing Settlement ), said he wants “an outright ban” of the soft-dollar fees charged by mutual fund firms (See Soft-Dollar Debate Continues Red Hot ). Soft dollars are payments to a full-service brokerage for its services in terms of commission revenue, rather than actual cash payments.