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Mutual fund broker methods examined

Thursday, May 22, 2003 | 9:47 a.m.

WASHINGTON, -- The Securities and Exchange Commission is examining how brokers are paid to sell mutual funds and whether buyers are informed of incentives to brokers or supervisors, SEC Chairman William Donaldson said.

"Our bottom line goal is to ensure that a potential mutual fund investor through an investment banking firm is aware of all the compensation or inducements that are being paid to the broker," Donaldson told the House Financial Services subcommittee on capital markets.

The investigation is focusing on whether brokers receive higher compensation by selling some funds over others, which may influence their advice to investors, people familiar with the investigation said yesterday. The agency also is examining undisclosed fees or other payments that brokers may receive for selling their own firm's mutual funds, they said.

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