Investment Company Institute Chairman Paul Haaga testified before the Senate Banking Committee this week, calling for strong sanctions to be levied on firms who abuse mutual fund trading.
He also said that an objective appraisal should be made concerning the ethical responsibilities of mutual funds with regard to individual and institutional investors.
Haaga also made the following specific points with regard to the mutual fund trading scandals:
“The message to everyone involved in the management and operation of mutual funds could not be clearer or more important,” Haaga said. “First, self-dealing abuses are intolerable and will result in the most severe possible sanctions.
“Second, firms and managers who place their financial interests ahead of the fund shareholders they are obligated to serve are in the wrong line of work.
“Third, if anyone hasn’t figured out on their own that serving investors above all other interests is mutual funds’ first and only commandment, individual and institutional investors have demonstrated that they are fully able to deliver the message directly.
“All of us have been reminded that the trust and confidence of investors can never be taken for granted.
“Among the responses to the trading abuses have been an extraordinary number of proposed changes to the laws and regulations governing mutual funds,” Haaga said.
“I am pleased that the Investment Company Institute has led the call for several of the most significant long-term reforms, and has offered its strong support for many others.
“There can be no question that the SEC is pursuing the most aggressive and wide-ranging mutual fund regulatory reform agenda since the Investment Company Act was passed in 1940.
“The ICI and mutual fund leaders are committed to doing everything in our power to support tough reform proposals that effectively serve individual investors and promote the highest standards of professional conduct.
“At the same time, however, we recognize that well-intended concepts or ideas that have been inadequately studied often fall far short of their goal, while producing permanent new costs and unintended consequences that can harm rather than help mutual fund investors. I am confident that current and future mutual fund investors will be very well-served if policymakers and industry leaders keep focused on meaningful reforms that are reasonably likely to achieve their intended benefits,” Haaga concluded.