One could say that things are not going well for the fund industry these days, especially after hearing the four hours of testimony to Congress yesterday. Coming out of that hearing Republican lawmakers talked of increasing the regulatory burden on what is already one of the most regulated industries in the nation. This cannot be what fund executives want to hear.

"Are investors getting a fair shake? Recent data indicate the answer is no; fees and expenses, in fact, are going up," was how Michael Oxley (R, Ohio) started his attack on the industry. After it was all done, Richard Baker (R-Louisiana) said that the members of the House will pen a letter to the SEC next asking for recommends on how and whether the regulations governing the fund industry should be changed. Baker will ask the SEC to have it recommendations ready by late April.

There were also clues in the hearing as to what some of the hot button issues may be.

Fee disclosure. This week's GAO report finding an 11 percent increase in the average fee levied by equity funds may not have helped the atmosphere at the hearing. Not surprisingly, Vanguard founder Jack Bogle also made fees the centerpiece of his legislation.

Soft-dollar disclosure. The most salacious testimony implied that some funds might use soft-dollar arrangements to pay for routine office expenses and executive perks rather than research. By testifying that his firm only pays roughly a penny per trade while competitors pay up to 5.5 cents, Harold Bradley, senior vice president at American Century Investment Management, shed light on how costly inefficient execution can be. Expect more investigation here, and possibly eventual calls for prospectus disclosure of soft-dollar fees.

Baker did not reveal what he intends to ask in the letter to the SEC, so there may be more.  

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