A Strictly Enforced Trading Deadline Will Not Threaten Retirement Plans

The Investment Company Institute (Institute) has made several recommendations that would fundamentally reform mutual fund trading to combat the trading abuses that have come to light recently. The 401khelpcenter.com supports these recommendations.

PORTLAND, OR, (PRWEB) November 2, 2003 -- The Investment Company Institute (Institute) has made several recommendations that would fundamentally reform mutual fund trading to combat the trading abuses that have come to light recently. They plan to pursue these recommendations with the Securities and Exchange Commission and through testimony before Congress.

The Institutes first recommendation calls for a firm 4:00 pm deadline for all mutual fund trades to be reported to mutual fund companies. No longer would mutual fund companies be allowed to accept retirement plan trades after 4:00 pm when received by intermediaries before 4:00 pm. Commenting, Institute Chairman Paul Haaga said, "The firm 4:00 pm deadline represents all that can be done to slam the late trading window shut. We intend and are committed to doing everything possible to keep this window shut and permanently locked."

The 401khelpcenter.com supports this recommendation. It will help ensure the absolute integrity of the mutual fund trading in the publics eye and is necessary to rebuild investor confidence. No exceptions to the 4:00 pm deadline should be made for retirement plan trades. To do so would leave a means for continued abuse since there is no effective way to ensure that trades were properly received by the intermediaries prior to 4:00 pm. It would continue to be an honor system which can be exploited in the future.

Already industry lobbying groups have begun to cry that such a requirement on retirement plan trades will create additional costs which may have the unintended consequence of actually lowering retirement savings and will cause other undesirable consequences to plan participants. In a press release dated October 30, 2003, the SPARK Institute, a 401k industry trade organization, suggested that such a rule would have "adverse implications…for placement and processing of orders, [and] that imposing such a deadline would not only be unworkable, but also would have a negative effect on participant investment accounts in the nearly 400,000 U.S. 401k plans."

This simply is not true. Many of the nations 401k plans operate in just such an environment today with no "adverse implications" for plan participants. Further, these late trade submission arrangements that intermediaries have with the mutual fund companies only became common in the 1990s. 401k retirement plans operated perfectly well long before there advent.

Making an easily enforceable absolute 4:00 pm deadline is the right thing to do. The retirement industry should put aside their own self interest in order to help rebuild investor confidence in the mutual fund industry.

About 401khelpcenter.com

401khelpcenter.com, located in Portland, OR, is a principal provider of information, opinion, analysis, news, rules, and other 401k resources for retirement professionals, plan sponsors, small businesses, and plan participants. For more information, visit the companys web site at http://www.401khelpcenter.com.
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