The Securities and Exchange Commission will issue rules next month to curb trading abuses in the mutual fund industry that favour large institutional investors over individual shareholders, SEC Chairman William H Donaldson has said.
Donaldson said the rules are needed because of evidence found in an investigation the SEC began in the industry in September after New York State Attorney General Elliot L Spitzer discovered problems and made them public.
The agency does not yet know how widespread the abuses are but that preliminary evidence suggests that they are common enough to warrant new rules, SEC sources told The Washington Post.
Mutual fund managers have argued against the need for more regulation and greater disclosure on the ground that the industry has never had a major scandal.