NASD to Create Task Force to Detail Fund Fees

NASD is forming a task force aimed at prodding mutual funds to explain the fees they charge investors and the incentives they pay brokers.

“Regulators need to cut through the fog and shine a light on investor costs and broker compensation,” Robert Glauber, the regulator’s chief executive, said in a speech at an NASD conference in Baltimore on Wednesday. He said the task force would examine how funds make hidden incentive payments to brokers and how their annual sales and marketing fees are assessed.

NASD, formerly the National Assn. of Securities Dealers, is the self-regulatory arm of the brokerage industry.

The Securities and Exchange Commission has been investigating sales practices in the $7.6-trillion mutual fund industry since last year. SEC Chairman William H. Donaldson, speaking at the conference, said the agency was moving at “warp speed” to pass final rules on mutual fund disclosure and governance.

The NASD task force, set to begin in June, will share its findings with the SEC later this year, Glauber said. Paul Haaga, executive vice president of Los Angeles-based Capital Research & Management Co. (parent of American Funds), said he expects to be on the task force. Haaga is chairman of the mutual fund lobbying group, the Investment Company Institute.