February 16, 2004
Brokers should owe an absolute duty of loyalty to their clients. All present or future charges by brokers should be disclosed at the time of sale. Abolutely every form of compensation must be disclosed.
Funds should be transparent. With respect to the accounting of funds - every transaction, down to every item of income and every item of expense, must be available, in detail, on-line. That is, investors should have e-access to the funds Profit and Loss Statement and, by clicking on any account code, be able to link to every transaction, no matter how small or insignificant, within that account code.
With this level of disclosure, individual investors, or fund rating analysts, will be able to assess the integrity and efficiency of each fund.
Alternatively, compensation contingent on performance should be encouraged by the SEC. Fund managers would be compensated only the basis of net-net yield. Only if they produced net yield for investors, would they be compensated.