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Rating:Jaffe Sees No 12b-1 Reform in 2010 Not Rated 0.0 Email Routing List Email & Route  Print Print
Thursday, January 07, 2010

Jaffe Sees No 12b-1 Reform in 2010

by: Daniel Tovrov

Fundsters awaiting 12b-1 reform this year could be in for a disappointment. Though SEC chair Mary Schapiro has been very vocal over the past months about tackling 12b-1 fees and last month said there "is a need for more fundamental change than merely disclosure reforms and a name change," MarketWatch columnist Chuck Jaffe thinks no change will happen this year.

Chuck Jaffe
In a Wall Street Journal piece Thursday, Chuck Jaffe gave his eight predictions for the fund industry, an industry that for him appears to be "destined for a year of bad news."

In the 12b-1 area, Jaffe wrote: "The Securities and Exchange Commission has recognized that 12b-1 fees, sales and marketing charges that are added to a fund's base expense ratio, are confusing and problematic. Regulators have vowed changes, but have done nothing. Even if the economy and markets improve in 2010, the agency won't get this job done."

He also sees both bond funds and money market funds will have poor starts to the decade. In addition, he predicts that 2009's hot funds will cool and falter, and that smaller ETF providers will get pushed out of the market as larger firms encroach into the market. Jaffe's grim outlook concludes with an offense against investors, predicting that "ruin awaits," as "hungry investors get stupid once more." 

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