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10.01.03
I'd be willing to wager that you were unaware that there was already one in place. With the Security and Exchange Commission getting trumped on a regular basis, it has begun to shown up in the news more frequently. A couple of weeks back, they suggested a revamping of the reports on fund management. The old system simply rated funds either exemplary, acceptable, or deficient. These widely subjective ratings will be replaced by widely subjective grading much like junior's teacher does. Now if any of you are in the presence of school age children, the grading process, either good or bad is often a very stressful time indeed. And not always indicative of what really happened.
The S.E.C. plan involves a two (if you are considered low risk fund) and four (if you are high risk fund) year inspections of fund operations. With any luck, they are hoping that their new system will identify oversight issues, trading irregularities, and settlement concerns. This happens in the wake of the first wave of lawsuits arriving on the doorsteps of those evildoers that were responsible for the most recent mutual fund industry misdeed. The suits, in my opinion are a bit pre-emptive as many of the funds under investigation have offered provable restitution without enriching lawyers.
But should the suits continue, look for a quick financial education on the Securities Act of 1933 and the Security and Exchange Act of 1934. These two acts are usually the foundation of lawsuits brought by shareholders against companies and executives.
As the same agency appears to be jumping out of bed on the rating issue, they jump back in one another. New proxy rules proposed by the S.E.C. have raised the hackles of the big pension managers. In an effort to reform the way directors of large companies are elected, the S.E.C. has instead suggested that shareholders be given the right to vote. Institutional investors, in many cases the largest shareholders will be able to vote as many as three directors ot the boards of the companies they hold massive interest. The S.E.C. sees nothing wrong with this as long as the nominees (wink, wink) aren't associated with the fund.
Once again, the state of New York, specifically comptroller Alan G, Hevesi has brought the flip side of the proposal to light. Called the "false impression of reform" the new S.E.C. rules would make objecting to and contesting directors virtually impossible.
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