SEC probes Capital Research

[seemslikeadream]

Newspaper report says federal regulator looking at sales practices of third-largest fund manager.
June 29, 2004: 7:14 AM EDT



NEW YORK (Reuters) - Capital Research and Management, the third-largest U.S. mutual fund manager, is under investigation by federal regulators over its sales practices, according to a report published Tuesday.

The Securities and Exchange Commission is examining whether Los Angeles-based Capital Research, manager of the $450 billion mutual fund group American Funds, rewarded brokerages that aggressively sold its funds by directing commissions on securities trades primarily to those firms, the New York Times reported.

Critics say this type of practice, known as directed brokerage, can represent a conflict of interest and be costly to investors because the fund firms often end up paying too much in commissions, boosting their expenses and lowering shareholder returns.



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The newspaper, citing unspecified sources who have been briefed on the discussions, said Capital Research has notified some people who sell its services about the investigation.

The Times reported that Capital Group spokesman Chuck Freadhoff declined to comment on the SEC matter other than to reiterate an earlier statement that federal and state regulators had requested information from Capital Research and that the company was cooperating with those requests

more
http://money.cnn.com/2004/06/29/funds/fundsfire_capresearch.reut/

[LizW]

1. Anyone understand what this means?

I have some money in one of these funds. Should I be worried?

[The Backlash Cometh]

2. Only if the SEC decides that the money to fix the problem

should come from the investors. I believe they did this with my investment company.