Revised Mutual Fund Regulations

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What Are the Rules Governing Mutual Funds?

For many years it was thought that in the realm of business ethics, mutual funds were rock-solid investments that were immune to the scandals of individual public companies such as Enron, WorldCom, etc. However, with recent revelations of unethical business practices by fund managers, it has become apparent that investors of mutual funds should be as cautious and knowledgeable about their rights as any investor who holds shares of stocks in individual public companies.

What Information Must Directors of Investment Companies Now Disclose about Approval of Investment Advisory Contracts?

Investors will now receive detailed information about the factors that formed the basis for the board of directors' approval of advisory contracts during the most recent fiscal half-year:

What Amendments Have Been Made to How the Board of Directors May Govern a Fund?

New regulations have been made pertaining to the governance of a fund in order to make the fund's independent directors even more independent and effective in overseeing and approving any transactions between the fund and its managers and affiliates so as to prevent any potential conflict of interests between those managers and the fund:

What Should I Do if I Think the Fund I Have Invested in Is Not Complying with These New Rules?

While there are plenty of governmental agencies and independent watchdog groups that monitor funds to make sure they are complying with the law, there are a huge number of funds to investigate, so sometimes the individual investor can be the best form of monitoring.

First, you should probably close your account with that fund, as it is a risky bet to put your money into a fund that is not operating within the limits of the law. Next you will want to file a complaint with the SEC to let them know of the improper practices of the fund. In addition, you may want to hire an attorney with experience in securities fraud. Your attorney can advise you of your rights and let you know if you are entitled to any damages in a lawsuit against the fund's managers.

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Last Modified: 11-28-2011 04:21 PM PST

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