Friday, February 21, 2014

Senators Nelson and Warren Urge SEC-CFTC Study on High Commissions on Managed-Futures Funds

Senators Bill Nelson (D-FL) and Elizabeth Warren (D-MA) have asked the CFTC, in conjunction with the SEC, to study what specific disclosures and additional investor information might improve the opportunity for investors in all managed-futures funds to retain more of the substantial profits that the industry is making and keeping through what appear, from financial press reports, to be unreasonably high fees, commissions, and expenses. In a letter to CFTC Chair Gary Gensler, the Senators said that one improvement for the protection of unwary investors would be to require that managers of these managed-futures funds clearly explain in writing how severely fees and commissions can consume or affect gross profits over time.  Senator Nelson chairs the Special Committee on Aging, of which Senator Warren is a member.

The legislators emphasized that individual investors, especially senior investors looking to find a suitable place to place their retirement savings, should be made aware of these managed-future funds’ fees and commissions and the draining effect of such upon their investments.  Although these funds are purported to be for sophisticated investors, some of these firms have a very low minimum investment that can be made from an Individual Retirement Account (IRA). The Senators are very concerned about the potential impact that these fees could have on the retirement security of the persons who invest in these funds.