Hon. Michael G. Oxley: “I stood on this floor last year and spoke of the need to reform and improve the accounting profession, financial…”

“I stood on this floor last year and spoke of the need to reform and improve the accounting profession, financial reporting, corporate governance, and Wall Street research practices. Congress responded admirably by passing the Sarbanes-Oxley Act which has proved successful in improving the transparency of financial statements and stemming the alarming rate of corporate fraud. Now, we necessarily turn our focus to mutual funds. We are in the midst of what one former SEC chairman calls the ``biggest financial scandal of the past 50 years.'' An industry representative has lamented the ``shocking betrayal of trust.'' Indeed, the scandals are deeply troubling for a host of reasons. First, we have become a Nation of investors, 95 million strong, and the investment vehicles of choice are mutual funds. It is imperative that Congress ensures that these investors, representing 54 million households, are protected. Second, the nature of the misconduct by trusted fiduciaries, fund executives, directors, and portfolio managers is especially egregious. Secret deals were reached to provide special trading privileges to large, preferred customers. Fund managers and executives were caught market-timing their own funds, and fund directors were found asleep at the switch. Third, the mutual fund fraud is widespread.”