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Wednesday, September 16, 2015

Will the SEC Allow You to Penalize Investors Who Stampede?

News summary by MFWire's editors

Imagine a herd of mutual fund investors rushing for the exits during the next market dip. Then imagine having the ability to convince at least some members of that herd to turn around thanks to a withdrawal penalty.

Mary Jo White
U.S. Securities and Exchange Commission
Next week SEC Mary Jo White and her four colleagues might turn that fantasy into a reality. David Michaels of Bloomberg reports that on September 22 the commission is set to vote on "a broader rule proposal" that would a measure that would allow mutual funds to voluntarily pass on some trading costs to investors when facing a flood of redemptions or heavy inflows. The idea is called "swing pricing."

Bloomberg's sources at the SEC are unnamed in the article, though Sean Tuffy, head of regulatory intelligence at Brown Brothers Harriman, did weigh in. And the wire service notes that the world's largest asset manager, Larry Fink's BlackRock [profile], is supportive of swing pricing. In fact, BlackRock already uses it in Europe.  

Edited by: Neil Anderson, Managing Editor

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