The MFWire
Manage Email Alerts | Sponsorships | About MFWire | Who We Are

Subscribe to MFWire.com's News Alerts [click]

Rating:DC Lobbyists Attack! Not Rated 5.0 Email Routing List Email & Route  Print Print
Wednesday, August 4, 2004

DC Lobbyists Attack!

News summary by MFWire's editors

The results of the Coalition of Mutual Fund Investors’ study on redemption fees probably do not come as a surprise to many in the fund industry. What was the finding? In essence, that fund companies do not know who their shareholders are.

Specifically, the CMFI found that of the top 50 fund firms with redemption policies, 88 percent admit they either exclude or limit redemption fees on omnibus accounts because they cannot identify customers.

Thirty two of the 50 fund groups have redemption fees on at least one domestic or international equity fund. The lobbyists also found that nine of the 18 fund groups that do not have redemption fees said they may not be able to enforce their restrictions on omnibus accounts.

Most of the top 50 fund companies – 36 of them – have investor holding periods of 30 to 90 days. Nineteen of the 32 companies with redemption fees use the first in, first out (FIFO) method of calculating fees.

The CMFI issued the report on Tuesday. The report includes a table of the top 50 fund firms’ policies and an executive summary.

The lobbyists recommend that intermediaries disclose shareholder identity to funds on a daily or transactional basis.

Senator Peter Fitzgerald (R, Illinois), a primary sponsor of the Mutual Fund Reform Act of 2004, released an accompanying statement on the report, with a reminder that a solution is a mere bill away: "The Mutual Fund Reform Act of 2004 is the only mutual fund reform bill that addresses this glaring deficiency by requiring disclosure of individual shareholders in omnibus accounts," said Fitzgerald.

Not surprisingly, a section of the MFRA requires intermediaries to disclose shareholder identities. Section 216 requires that each account intermediary provide the name, taxpayer identification, mailing address and individual transaction data for each account.

Fitzgerald’s statement on the report did illustrate that the senator understands why intermediaries’ feet need to be held to the fire: "[t]o enforce fund policies fairly and uniformly, there are two possibilities...either the funds themselves do it, in which case they obviously need the information about their omnibus account customers and their trading, or the intermediaries do it, which they have not and which is unlikely since they have a financial disincentive to enforce these policies themselves."

CMFI is a Washington, D.C. lobbying firm started by three partners of D.C. law firm McGuiness & Holch. Niels Holch, Kevin McGuiness, and Markham Erickson started the firm in July of last year. 

Edited by: Theresa Sim

Stay ahead of the news ... Sign up for our email alerts now

 Do You Recommend This Story?

Return to Top
 News Archives
2024: Q3Q2Q1
2023: Q4Q3Q2Q1
2022: Q4Q3Q2Q1
2021: Q4Q3Q2Q1
2020: Q4Q3Q2Q1
2019: Q4Q3Q2Q1
2018: Q4Q3Q2Q1
2017: Q4Q3Q2Q1
2016: Q4Q3Q2Q1
2015: Q4Q3Q2Q1
2014: Q4Q3Q2Q1
2013: Q4Q3Q2Q1
2012: Q4Q3Q2Q1
2011: Q4Q3Q2Q1
2010: Q4Q3Q2Q1
2009: Q4Q3Q2Q1
2008: Q4Q3Q2Q1
2007: Q4Q3Q2Q1
2006: Q4Q3Q2Q1
2005: Q4Q3Q2Q1
2004: Q4Q3Q2Q1
2003: Q4Q3Q2Q1
2002: Q4Q3Q2Q1
 Subscribe via RSS:
Add to My Yahoo!
follow us in feedly

©All rights reserved to InvestmentWires, Inc. 1997-2024
14 Wall Street | 20th Floor | New York, NY 10005 | P: 212-331-8968 | F: 212-331-8998
Privacy Policy :: Terms of Use