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AFL-CIO joins the disclosure debate Post rated (max 5)
By Duff Ferguson (rating 3.84) on 21:22 08.23.00
The open disclosure debate got a powerful shot in the arm this week as news leaked out that the AFL-CIO, a powerful collection of 68 national and international labor unions representing an incredible 13 million Americans, is preparing to join the fight for more open disclosure in the mutual fund industry. Even we at MetaMarkets.com are amazed how the incendiary message of our May letter to the ICI and Dave Nadig’s straight-talking June ICI testimony has stretched far beyond the clubby mutual industry to the world of the working-class salaryman.
Here’s the latest list of organizations out there following our lead and beating the bongos for more open disclosure:

-- MetaMarkets.com
-- Morningstar
-- National Association of Investment Clubs
-- IPS Funds
-- On24.com
-- LionShares.com
-- Idayo.com
-- FundDemocracy.com
-- The Consumer Federation of America
-- Financial Planning Association
-- AFL-CIO

On the horizon, former SEC official and devoted fund industry thorn-in-the-side Mercer Bullard (founder of FundDemocracy.com) is gathering together an impressive crowd for an October disclosure symposium in Washington. Besides our own Dave Nadig, speakers will include Paul Roye, director of the SEC's Division of Investment Management, Morningstar’s CEO Don Phillips, and Harold Evensky, the much quoted head of Florida financial planning firm Evensky Brown & Katz. You’d think all of us here at MetaMarkets.com would be smiling!

But we’re not.

In his June testimony, Dave warned the ICI’s SEC Rules Committee what would happen if the industry didn’t listen to investors' call for more information and respond quickly with decisive action. Our original message was simple: investors deserve to know what is going on with their money, and we (meaning the fund industry) should be smart enough to give investors what they want before the SEC has to step in and force change on us with increased regulations for all.

And, sure enough, that is now the direction that this whole debate is taking…fast.

Mercer Bullard, the Financial Planning Association, and the Consumer Federation of America have all filed petitions with the SEC demanding mandatory increased disclosure. The AFL-CIO can’t be far behind.

Don’t get me wrong – investors deserve their information, and if this is the only way it can happen then so be it. But how simple it would have been for the ICI to recommend immediate industry-wide research into investor disclosure needs! How hard would it have been for this influential trade organization to recommend that all funds move to at least quarterly full holdings disclosure right away, since almost all fund companies already report quarterly full holdings to Morningstar anyway?

Instead the industry fell back on tired, paternalistic arguments, saying it knew what was best for its shareholders when it could have just listened to them. But anyone who takes a look at the MetaMarkets.com site can see that talking to shareholders directly is not such a radical concept!

As Peter Leyden said back in May: “The world is heading for more and more transparency and so businesses had better start adapting to it. Those that move quickly and even facilitate it will thrive. Those that resist it or subvert it will suffer in the long term…”

We’ll keep urging the industry to act now – it could still take this issue and use it to show how shareholder-friendly it can be. It may not be too late. But the clock is running out, and the chances for the industry to grab the open disclosure ball and run with it are quickly disappearing.

http://www.metamarkets.com/
http://www.morningstar.com/
http://www.better-investing.org/
http://www.ipsfunds.com/
http://www.on24.com/
http://www.lionshares.com/
http://www.idayo.com/
http://www.funddemocracy.com/
http://www.consumerfed.org/
http://www.aflcio.org/