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Rating:B/Ds Will Refund Excess Commissions Not Rated 0.0 Email Routing List Email & Route  Print Print
Wednesday, March 12, 2003

B/Ds Will Refund Excess Commissions

by: Sean Hanna, Editor in Chief

The NASD is promising that fund investors who paid too much in commissions will get restitution. "Our expectation is that investors who were overcharged will be reimbursed," Mary Schapiro, vice chairman of the NASD told the media. She added that broker-dealers who were found to have committed egregious conduct may also face fines.

Schapiro's comments came after the NASD, SEC and NYSE jointly released their study covering the issue of breakpoint recognition in the purchase of fund A shares. Because of the findings in the report, the regulators will look into a sample of fund purchases covering the past two years at all of the nation's more than two thousand broker dealers.

Also yesterday the Government Accounting Office (GAO) released an updated look at fund fees that claims shareholders saw fees rise 11 percent from 1999 to 2001. The increase represents a 7 basis point climb in the average expense ration of the largest 46 stock mutual funds to 70 basis points from 63 basis points.

The GAO also said that bond fund expense rations fell to 54 basis points from 57 basis points.

It blamed the rising fees on a decline in the assets in stock funds. That reasoning may also reflect why the expense ration in bond funds fell as assets in fixed income funds rose in 2001. A second reason for the increase is the growing number of funds adding 12b-1 fees and the generally rising costs funds must pay for distribution.

Later today the House Financial Services Capital Markets subcommittee will also start its hearings on the fees levied by mutual funds. Paul Haaga is scheduled to testify at the hearing (he is the current ICI chairman and an executive vice president and director at Capital Research and Management). 

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