Barbarians

Articles by Fund Democracy: Archives

Mutual Fund Portfolio Disclosure in the Internet Era, wallstreetlawyer.com (Sep. 2000).

Abstract: You've heard it before: The Internet has changed everything. And mutual fund regulation is no exception. In July and August, Fund Democracy, the Financial Planning Association, and ten consumer groups, including the Consumer Federation of American and the Consumers Union, each separately petitioned the SEC to adopt rules to improve mutual fund portfolio disclosure. The AFL-CIO also has announced that will file a petition. Although this initiative might not seem to be about the Internet, it is. And so will be the mutual fund disclosure debate for the foreseeable future.

This article reviews the basis for Fund Democracy's portfolio disclosure petition, and discusses the petition as an illustration of how SEC must regulate securities activities to remain effective in the Internet era. Technological developments in information management and communications have transformed every aspect of our economy, with information-based industries such as financial services feeling the effects faster and more profoundly than any other sector. New technology has created enormous challenges for regulators of information-based industries, as 20th century regulatory models have in many ways become irrelevant.

The key issue raised by new technology is not, however, whether regulators can effectively fulfill their mission in the Internet era. I have no doubt that they can and will. The crucial question is whether the United States will continue to host the most effective securities regulatory structure in the world. U.S. financial services firms should pay careful attention to this question, because the success of U.S. financial markets depends on the effectiveness of the rules under which they operate. As goes our regulatory system, so go the markets it oversees. (The full text of this article is available to wallstreetlawyer.com subscribers.)