SEC to address mutual fund fees after July

By Sarah N. Lynch

WASHINGTON | Fri 29 april 2011 3: 30 pm EDT

WASHINGTON (Reuters)-U.s. securities regulators don't expect finalizing new rules on mutual funds distribution costs to all new regulations required by the Dodd-Frank financial reform law were made, a top regulator said on Friday.

Elisse Walter, a Commissioner with the Securities and Exchange Commission, discussed the Agency's Upcoming agenda for money market funds, target date funds and other investment company regulation in an address before the mutual fund Directors Forum.

In her speech, on behalf of SEC Chairman Mary Schapiro, her appearance at the last moment had to cancel, said Walter that the Agency plans to return to the issue "with full force" after the deadline of July for Dodd-Frank rules.

Last July, the SEC proposed new rules on so-called "12b-1 fees, which are deducted from investment funds are to pay for Fund promotion and other services for shareholders.

Some SEC officials, including Schapiro and Walter, are concerned that investors may not realize that the fees are deducted from their funds or how the money is used.

The plan last July proposed certain limits on sales charges and also aimed at enhancing transparency for investors, partly by funds to prohibit the use of the obscure reference "12b-1 fees" in communication with investors.

"Fees must be set in a way that is fair," Walter later told reporters on the sidelines of the event. "One of the things that always suffer from me personally is that it is very difficult for investors to understand what they pay and when."

Walter said the 12b-1 plan has generated more than 2,400 comment letters, many raise concerns about things that want to retain investor choice in payment options and also the use of 12b-1 fees to pay for the costs in connection with the management of 401K plans.

In addition to this plan, said Walter that the SEC has also other large items on the agenda, such as finalizing its proposal on target date funds and do more on money market mutual fund reform.

The SEC is slated to hold a round table discussion on the reform of money market fund on 10 May.

(Reporting by Sarah n. Lynch; editing by John Wallace)

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