Action regarding mutual fund abuses should have come sooner.

Reading the continuing stream of stories on the recent disclosures of mutual fund shenanigans feels like "déjà vu all over again." Although I'm pleased that regulators and the financial services industry seem to be serious about punishing the evil-doers and cleaning up the fund industry, what took them so long? I, along with innumerable of my fellow professionals, have been, unsuccessfully, attempting to get institutional and regulatory action for years. For example:

1998, The Gang of 72

Discussions among a number of advisors made clear that there was widespread concern by practitioners regarding the treatment of our clients by the fund industry. The result was, based on an idea first suggested by New York planner Milton Stern, a grass roots meeting of 72 concerned independent advisors and 12 senior representatives of the fund industry. Advisor confab participants raised serious concerns regarding the timely reporting of portfolio composition, portfolio tax management, management fees and operating and overhead costs.

1998, at a House Subcommittee on Finance and Hazardous Materials

At a hearing on fund expenses that I was invited to participate in as a "public" spokesperson, my written testimony began, "The general theme of this testimony is that the mutual fund industry has drifted from its traditional focus on the management of assets for the benefit of its shareholders."

1999, at a SEC Roundtable on Independent Fund Directors

Once again as a "public" representative, my testimony noted, "The protection of investors' interest provided by independent trustees envisioned by the Securities Act has not been effective ... Acting as fiduciaries, one would expect these trustees to rein in any trend on the part of the fund company to place the fund's interest over the public interest. There is widespread skepticism among professional investment advisors that this protection is working."

My suggestions for actions included:

Use the prestige and visibility of the government to remind the fund industry of the responsibilities of their trusteeship.

Hold independent fund trustees accountable for their fiduciary responsibility to my clients and the rest of the investing public.

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