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ICI Chairman, President Send Open Letter to Congress Concerning Trading Abuses
Washington, DC, January 29, 2004 - Institute Chairman Paul G. Haaga, Jr. and ICI President Matthew P. Fink, in an open letter to Congress, reiterated the fund industry’s support for governmental efforts to combat trading abuses and reaffirmed funds’ commitment to tough industry action to regain shareholder confidence.
“Trading abuses involving mutual funds are appalling,” Haaga and Fink wrote. “If mutual funds do not put shareholders first, we will no longer be the investment of choice for working Americans. And we will no longer deserve to be. As the reform process continues, policymakers should rightfully expect a lot from us. Mutual funds are where more than 60 percent of middle-income Americans invest. We pledge that putting investors first will again be the heart of our work, not just in this Congress, but in every year to come.”
The two fund leaders also noted a series of actions the fund industry has already taken in the effort to regain investor trust.
- Unequivocal support for vigorous law enforcement by federal and state officials.
- Calls for tough regulatory measures to combat trading abuses, including a mandatory 2% redemption fee on most short-term trades; a “hard” 4:00 p.m. trade reporting deadline; and all fund companies to ban, through their ethics codes, any unfair trading in fund shares by employees.
- Proposals to abolish “directed brokerage,” dramatically reduce the use of “soft dollars,” and disclosure of special compensation incentives, at the point of sale, involving a particular fund recommended by a broker.