The House reportedly voted to stiffen penalties for mutual fund abuses on Wednesday in response to the growing stream of fund companies being cited for illegal or improper trading practices.
The House passed the bill in a decisive 418 to 2 vote, and the bill now awaits approval by the Senate, although it is not expected to be acted upon until next year, according to an
Both Democratic and Republican representatives spoke widely in favor of the legislation, which calls for toughening penalties for abuses, further separating directors on corporate boards from fund managers, and increasing disclosure to investors about fees and fund operations, the report said.
The bill also bans market-timing trades by fund insiders, a practice that isn't illegal but reduces profits for longer-term shareholders.
Rep. Richard Baker (R., La) said the purpose of the legislation was to "help bring the bright light of truth into fund fees, clean up the way funds are managed and eliminate the conflicts of interest and utter disregard of
fund directors' duty to mutual fund investors that plague this industry," according to the report.
The two votes against the bill were by Reps. Ron Paul (R., Texas) and Jeff Flake (R., Ariz.).