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This page was last updated on October 31, 2003.

On November 3 & 4, Fund Democracy will testify before Senate and House subcommittees on the mutual fund scandal and action needed to address the widespread and pernicious trading abuses that have recently been discovered. In his testimony, Mercer Bullard, Fund Democracy's Founder and President, has proposed that Congress create a Mutual Fund Oversight Board.

In an October 31, 2003, article, the New York Times stated that the Board would "essentially supplant the commission's division of investment management as the primary regulator of mutual funds." The article also implied that Fund Democracy supports New York Attorney General Spitzer's recent statement that "heads should role" at the SEC. The following is Fund Democracy's response to the New York Times article:

To the Editor,

I would like to clarify two points in your October 31, 2003 article, “Spitzer Blames the SEC.”

First, the article might give the impression that I support Mr. Spitzer’s statement that “heads should roll” at the SEC. I do not. While I agree with many of Mr. Spitzer’s substantive criticisms of the SEC, I do not endorse or in any way support his statements regarding SEC staff. The issue is policy, not personnel.

Second, my proposal to create a Mutual Fund Oversight Board would not and should not “essentially supplant the commission’s division of investment management as the primary regulator of mutual funds,” as stated in your article. In fact, the SEC, including principally its Division of Investment Management (where I was formerly an Assistant Chief Counsel), would continue to be the primary regulator of mutual funds. Indeed, in any matter with respect to which there was any disagreement or conflict between the Board and the SEC, I would expect the SEC to have final decisionmaking authority. I expect to more fully describe my proposal for a Mutual Fund Oversight Board in testimony before a House subcommittee on Thursday, November 6.

I believe that the Mutual Fund Oversight Board would provide significant benefit to fund shareholders, the SEC and the fund industry. For decades, fund directors have been criticized as being “empty suits” – sometimes fairly, sometimes not. The time has come to develop a new structure to help, not “supplant,” the SEC in the joint effort to restore Americans’ trust in the mutual fund industry.

Sincerely,

Mercer Bullard
Founder and President
Fund Democracy, Inc.