Vanguard CEO Brennan urges decisive action

Speaking before the Greater Boston Chamber of Commerce yesterday, Brennan backed a 4 p.m. cutoff for mutual funds to receive purchase orders for customers to receive that day's fund price, to deter late trading, a fee on short-term buys to dissuade investors from rapidly trading in and out, or market-timing funds, and a strict code of ethics to prevent fund employees from abusing trading privileges in funds they oversee.

Separately, he also called on brokers and others who sell mutual funds to make clearer disclosures of costs and expenses so investors can get a better idea of what they're actually paying for.

Brennan defended the mutual fund industry's reputation and its record of delivering cost-competitive investments to the public, but worried that investors would "lose sight" of mutual funds' benefits because of recent trading abuses. "Sadly, it can't be seen as a few bad apples. But I would caution everyone" from concluding "that the entire industry has lost its way. I can assure you it hasn't." Like many other investment firms, Vanguard, the second-largest mutual fund group behind Boston's Fidelity Investments, has been asked by government regulators for information on late trading and market timing. Brennan said he feels "very good about Vanguard's position" on such activities.

Andrew Caffrey can be reached at caffrey@globe.com.