May 2, 2005
The proposed regulation makes absolutely no sense. In fact, it is beyond absurd. Has any one at the SEC bothered to look at the portfolio turnover of mutual funds? Mutual funds actually try to time the market
The fundamental flaw with the proposed regulation is that it does not penalize the parties that engaged in criminal activities i.e, the mutual funds themselves but in fact rewards them.
A two percent redemption fees is way too high. In this age of electronic trading, trading costs are not very high. In addition, the requirement that investors hold securities for up to 90 days is also ridiculous. The holding period should be much shorter.