White House would add to SEC’s authority
WASHINGTON - The Obama administration has sent Congress legislation designed to protect investors by bolstering the authority of the Securities and Exchange Commission.
The proposal unveiled yesterday is part of the sweeping plan for overhauling the US financial rule book that the administration is pressing lawmakers to enact to help avert another meltdown. It seeks to put investment advisers providing services to retail investors and stockbrokers under the same standards of conduct, and to strengthen rules governing the timing and quality of disclosures by investment funds.
For example, the SEC could require that investors be given a concise summary prospectus of mutual funds and a simple disclosure showing the costs of a fund before the completion of a sale. Currently, most fund disclosures and prospectuses don’t have to be delivered to investors until after a transaction is completed.
The 20-page legislative proposal also clarifies the SEC’s authority to conduct consumer testing as a way of creating more effective and clearer disclosure documents.
In addition, the SEC would be empowered to establish a fund to pay whistle-blowers for information leading to enforcement actions.
The plan appears to be less controversial than other aspects of the administration’s overhaul blueprint.
