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Fed Chairman, Treasury Secretary Urge Criminal Punishment of Mutual Fund Fraudsters

WASHINGTON - Finding and criminally prosecuting those who use mutual funds to "steal from investors" is just one of several recommendations coming from Federal Reserve Board Chairman Alan Greenspan and Treasury Secretary John Snow. Those who "engage in fraud and misdeeds must be apprehended and punished promptly in order to...

By Michelle A. Samaad | Updated on November 25, 2003

WASHINGTON – Finding and criminally prosecuting those who use mutual funds to “steal from investors” is just one of several recommendations coming from Federal Reserve Board Chairman Alan Greenspan and Treasury Secretary John Snow. Those who “engage in fraud and misdeeds must be apprehended and punished promptly in order to preserve the integrity of these financial institutions and to preserve the trust placed in them,” Greenspan and Snow wrote in a Nov. 18 letter to Richard Shelby (R-Ala.), Chairman of the Committee on Banking, Housing and Urban Affairs. Applauding Congress’ efforts to strengthen oversight of the mutual fund industry, Greenspan and Snow urged legislators to make sure that fees “are fully subject to the competitive tests of the marketplace” and that information disclosures “should be designed to provide investors with real value rather than serve mainly to increase costs and decrease returns.” “Whether we consider (mutual funds) role in providing financial resources to fund business growth and development and job creation, or we consider their significant service in helping people invest for education, retirement or other needs, mutual funds are intermediaries that occupy a major place in our national economy,” read the letter, adding “misdeed harm investors while threatening the ability of mutual funds to fulfill their valuable economic mission.” [email protected]

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