WEST PALM BEACH, FL (HEDGECO.NET) – The US Securities and Exchange Commission has ordered mutual fund establishments to stop paying excessive commissions to brokers for promoting the fund products ofthose firms. These are the continuing fallout from the mutual fund/hedge fund trading scandals of the past year.
The new proposals are aimed at stopping the abuses involving incentive commissions paid to brokerage institutions. In one of such complaint, Morgan Stanley paid $50 million to settle with the SEC over such matter.
Incentive commission payments are compared to favoritism in some respects because the commission paid would guarantee that the payer receives special considerations. Such payments generally remain unknown to investors. The SEC new rule requires fund managers to disclose such payments, by informing investors about their manager�s compensation details. Such disclosure would also include incentive payment arrangements if any.
William Donaldson, SEC Chairman said the new rules �Effectively compliment the comprehensive mutual reform efforts that have been underway since last fall�, he added, �I think we now have a system that we ought to give a chance to work and see the improvements I hope it will bring.�
According to published reports the SEC has imposed about $2.5 billion in penalties to fund companies involved in such allegations, while continuing to investigate others.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
Be sure to check out our sister sites. www.hedgefundlounge.com, www.hedgefundtools.com, and www.hedgefundemployment.com.
