Senate Committee Attacks SEC Over Mutual Fund Abuses

by Carla Johnson, Investors Offshore.com

06 November 2003

There has been bipartisan condemnation of the US Securities and Exchange Commission (SEC) for its failure to pick up sooner on the trading abuses taking place in the country's mutual fund sector, according to reports in the US media.

Speaking at a hearing of the Senate Governmental Affairs Committee, SEC enforcement director, Stephen Cutler revealed that following a survey conducted by the regulator, it had emerged that around a quarter of the nation's largest brokerages had assisted clients in illegally trading mutual funds after hours.

This information prompted head of the Committee, Senator Susan Collins (R-Maine), to announce that:

"It is appalling to me that these practices, which benefit a select group of individuals at the expense of the vast majority of mutual fund investors, continue." She added that:

"I question why the Securities and Excchange Commission (SEC)... has failed to detect these practices, to impose appropriate restrictions on them, or to penalize those who appear to be misusing investors' money."

Recommended