Mutual Fund Reform Act of 2004

Bill: 108-s-2059
Sponsor: Sen. Fitzgerald, Peter [R-IL]
Introduced: 2004-02-10 in the Senate
Policy area: Finance and Financial Sector
Subjects: Accounting
Administrative procedure
Advertising
Auditing
Auditing and auditors
Brokers
Business ethics
Chief executive officers
Civil Rights and Liberties, Minority Issues
Commerce
Commercial arbitration
Conflict of interests
Congress
Congressional investigations
Congressional reporting requirements
Consultants
Consumer education
Contracts
Corporate finance
Corporate management
Corporation directors
Corporation reports
Cost accounting
Crime and Law Enforcement
Crime prevention
Deceptive advertising
Derivative securities
Disciplining of employees
Discrimination in employment
Dismissal of employees
Electronic government information
Executive compensation
Executive reorganization
Families
Federal-state relations
Fees
Financial services
Financial statements
Government Operations and Politics
Government paperwork
Government publicity
Governmental investigations
Grievance procedures
Independent regulatory commissions
Information disclosure (Securities law)
Information services
Insider trading in securities
Internet
Investment advisers
Investment banking
Investments
Investors
Labor and Employment
Law
Lawyers
Legislation
Marketing
Mutual funds
Restrictive trade practices
Sales promotion
Science, Technology, Communications
Securities and Exchange Commission
Securities fraud
Securities industry
Securities regulation
Stock exchanges
Stockholders
Telephone
Trusts and trustees
Valuation
Web sites
Whistle blowing

Summary:
action_date: 2004-02-10
text: 
Mutual Fund Reform Act of 2004 - Amends the Investment Company Act of 1940 to: (1) reduce from 60 percent to 25 percent the maximum number of interested persons serving on the board of directors of a registered investment company; and (2) prohibit an interested person of such company from serving as chairman of such board of directors.
 
States that a fiduciary duty is owed by: (1) the board of directors to act with loyalty and care in the best interests of shareholders; and (2) an investment adviser to supply material information necessary for independent directors to review and govern the company.
 
Revises guidelines governing independent accounting and auditing.
 
Directs the SEC to require adoption of a code of ethics by a registered investment company and by its investment advisers and principal underwriters.
 
Directs the SEC to require each senior executive officer of an investment adviser to certify in periodic reports to shareholders that specified procedures are in place to verify compliance with transparency and specified ethical considerations.
 
Grants whistleblower protection for employees of publicly traded companies and registered investment companies.
 
Directs the SEC to develop standardized disclosures for: (1) expense and transaction cost ratios; (2) cost structures; (3) investment adviser compensation; (4) point of sale; and (5) additional disclosures of broker compensation.
 
Repeals Rule 12b-1 fees (asset-based distribution expenses paid by investors). 
 
Prohibits: (1) revenue sharing; (2) directed brokerage fees; (3) soft dollar arrangements; (4) short-term trading; and (5) joint management of mutual funds and hedge funds.


Legislative actions:
action_date: 2004-02-10
text: Read twice and referred to the Committee on Banking, Housing, and Urban Affairs. (text of measure as introduced: CR S797-802)
action_date: 2004-02-10
text: Sponsor introductory remarks on measure. (CR S793-797)
action_date: 2004-02-10
text: Introduced in Senate