Second Bill on Mutual Fund Fee Disclosure Introduced in House of Representatives

A second bill, The Mutual Fund Fee Reform Act, aimed at mutual fund fee disclosure rules has been introduced in the U.S. House of Representatives. The bill, sponsored by Rep. Dennis Moore (D-KS) and Rep. Mike Castle (R-DE), would direct the U.S. Securities and Exchange Commission (SEC) to revise regulations to require more detailed 12b-1 fee disclosure to fund investors.

Moore’s bill focuses on 12b-1 fees, charges first mandated in 1980 by the SEC to help smaller mutual fund companies cover marketing and distribution costs. In the nearly three decades since, 12b-1 fees have been used for an expanding array of fund expenses. Moore said the SEC should require more disclosure so that investors understand how the fee is being used.

The bill, introduced earlier this summer, follows legislation introduced in July by Rep. George Miller (D-CA) that would require 401(k) plan administrators to disclose all fees charged to a plan participant each year.

In March, the House Education and Labor Committee, chaired by Miller, held hearings on mutual fund fees. Miller indicated at the time that more hearings were planned, though none has been scheduled.