Pricing transparency should improve greatly if the pending fund reform legislation introduced by Rep. Richard Baker (R-La.) passes. The bill requires the disclosure of not only portfolio transaction costs, but also of brokerage commissions. New York's Spitzer fired an equally chilly warning shot over the bow of the industry in December, when the settlement he negotiated with Alliance Capital to settle the company's trading transgressions-namely allowing a number of large clients to engage in market timing-required the firm to roll back its decidedly high fees by $350 million over the next five years.

Although the SEC negotiated a separate $250 million settlement with Alliance Capital, agency officials pointedly declined to set fees at the complex, saying they believed that all restitution should go to victims, not future investors. And while most observers now acknowledge what fund critics have charged for years-that mutual fund fees are too high-more than a few question whether it's within a state attorney general's purview to tell funds what to charge shareholder.

With the SEC sidestepping the issue, it's imperative that state regulators like Spitzer require funds to reduce fees, says Edward Seidel, president of Florida-based The Benchmark Companies. Seidel investigates fund fees and operations for pension fund clients, and says that in most cases he analyzes pensions are indeed being overcharged. "If institutional clients are routinely charged too much, how can small investors demand fair pricing on their own?" Seidel asks.

Boston advisor LeBlanc says his clients are taking a hard look at what they pay for funds as a result of the scandals. The day may be coming soon when it will be up to advisors, not just funds, to ensure fees are fair.



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