March 20, 2004
You catch the hedge funds and mutual fund insiders cheating the process, negatively impacting mutual fund returns, and making a lot of money at the expense of small investors. Then you propose to reward the mutual funds by mandating redemption fees that will improve mutual fund returns at the expense of uneducated or nervous small investors.
It would have been an antitrust violation for the mutual funds to get together and agree on the implementation of an across the board two percent redemption fee. Im sure they appreciate that the Securities and Exchange Commission is proposing to fix prices for them.
Fair value pricing is the real solution. Considering all the easy money that was being made by mutual fund insiders and their hedge fund buddies, is it any surprise that funds companies have ignored your fair value pricing requirement for years? The time for excuses is over. Dont let the fund companies off the hook by directing their developmental resources to the implementation of mandated fees. Instead, force them to accurately price their funds.
With fairly valued funds and full disclosure of transfer policies, the determination of fees can be left to free market competition.