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Fitzgerald Cheers SEC for Rules Protecting Investors


Soon to retire Sen. Peter Fitzgerald (R-Ill.) recently applauded the efforts of federal securities regulators for their continuing efforts to enact a series of mutual fund reforms that benefit individual investors.

In recent months, the Securities and Exchange Commission has put forth a spate of new rulemakings designed to address inherent flaws in the structure of the $7.5 trillion mutual fund industry, including 17 related to issues outlined in Fitzgerald's Mutual Fund Reform Act of 2004, introduced last February.

"Although many of them don't know it yet, investors in America gained billions of dollars in 2004 because of the smart, tough-minded approach Chairman William Donaldson and the Commission have taken to the problems in the mutual fund industry," Fitzgerald said. "The extra transparency will reduce the amount of fees investors will pay, and, compounded over time, will mean significantly larger retirement nest eggs."

Among the 17 items from his proposed legislation the SEC has addressed are provisions requiring fund companies to employ an independent chairman, independent directors and a chief compliance officer. In addition, the SEC tackled some of Fitzgerald's other concerns, such as directed brokerage, market timing and opaque disclosure practices. Still, Fitzgerald believes mutual funds need further tweaking, changes that could only be achieved through Congress. He favors tightening the definition of independent directors, eliminating soft dollars and clarifying the fiduciary responsibilities fund trustees owe shareholders. "I urge Congress to continue to push for reforms of the industry after I leave the Senate and am hopeful that the SEC will move ahead on its own with other improvements," he said. Fitzgerald plans to return to the private sector at the end of the year.