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This page was last updated on November 1, 2003.

Testimony of Mercer Bullard before the Subcommittee on Financial Management, the Budget, and International Security, Governmental Affairs Committee, U.S. Senate (Nov. 3, 2003)

Testimony of Mercer Bullard before the Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises, Committee on Financial Services, U.S. House of Representatives (Nov. 4, 2003)

On November 3, Fund Democracy will testify before a Senate subcommittee on the mutual fund scandal and action needed to address the widespread and pernicious trading abuses that have recently been discovered. Fund Democracy also will testify before a House subcomittee on the same topic on November 4.

In his testimony, Mercer Bullard, Fund Democracy's Founder and President, has proposed that Congress create a Mutual Fund Oversight Board. The current mutual fund scandal demonstrates a systemic breakdown in compliance in the mutual fund industry that necessitates structural reforms in the way that mutual fund boards are regulated.

Fund Democracy strongly recommends that Congress create a Mutual Fund Oversight Board that would have examination and enforcement authority over mutual fund boards. The Board would be charged with identifying potential problems in the fund industry and ensuring that fund boards are actively addressing these problems before they spread.

The Mutual Fund Oversight would supplement the SEC's efforts, not supplant them as stated in an October 31, 2003 New York TImes article. The SEC would continue to be the primary regulator of mutual fund boards and the the fund industry at large.

The Mutual Fund Oversight Board would be financed from assessments on mutual fund assets to provide an adequate and reliable source of funding. Board members would be persons with specific expertise in the fund industry and would be appointed for five year terms by the Commission to ensure their independence.

This model, which ideally combines the strengths of independent, expert oversight with the advantages of a reliable and adequate funding source, would help restore confidence in the fund industry and protect fund shareholders from the reoccurrence of the kinds of abuses that have recently come to light.