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Tuesday, July 03, 2012

ICI and SEC In a... Statistics War?

News summary by MFWire's editors

SEC chairman Mary Schapiro and the Investment Company Institute, which represents the mutual fund industry, are having a statistics war. The Securities Technology Monitor reports that the mutual funds group and the regulators are arguing about the number of times money fund sponsors have intervened to help save their funds.

Schapiro raised the "300 money fund" rescues number during her speech before the Committee on Banking, Housing and Urban Affairs, saying "sponsors have voluntarily provided support to money market funds on more than 300 occasions since they were first offered in the 1970s."

Schapiro's numbers shocked ICI representatives. Sean Collins, senior director of industry and financial analysis at ICI, said:

"The SEC has not released its analysis. So we do not know precise dates or what exactly is being measured or counted. Nevertheless, we believe the estimate of 300 occasions is highly misleading."

ICI members cited the figures in Moody's report on August 9, 2010, stating that 181 funds received "support from sponsors" from 1980 to August 2009. The ICI also highlighted that 137 of these cases happened before 2000 and 108 before 1994.

Collins wrote:
In other words, they took place either before the SEC significantly tightened the risk-limiting provisions of Rule 2a-7 in 1991 for taxable funds, or before it tightened the application of Rule 2a-7 to tax-exempt funds in 1996 and 1997.
Schapiro's staff said the data given by the chairman is the product of a "comprehensive review" of documents filed by mutual funds. Schapiro also added that during the 2008 crisis, more than 100 funds needed help from their sponsors.

The ICI staff challenged this figure as well.

"The Moody's study indicates that 36 U.S. registered money market funds received sponsor support during the period 2007 to August 2009," said Collins.  

Edited by: HFD

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