<i>Morningstar: Schapiro will champion transparency</i>

President-elect Barack Obama’s selection of Mary Schapiro to head the Securities and Exchange Commission will likely mean increased attention to the mutual fund industry, said one fund industry watcher.

President-elect Barack Obama’s selection of Mary Schapiro to head the Securities and Exchange Commission will likely mean increased attention to the mutual fund industry, said one fund industry watcher.
“I would expect that the SEC will be more proactive when it comes to funds,” said Don Phillips, managing director of Morningstar Inc. of Chicago.
“She’s not someone from the industry, she’s a regulator,” he said.
One area where a Shapiro-led SEC may be particularly assertive is in demanding greater fund transparency, Mr. Phillips said.
Recent events such as the dramatic drop of the $672 million Oppenheimer Champion Income Fund (OPCHX) from OppenheimerFunds Inc. of New York — year-to-date down 79.7%, while its high-yield bond fund category was down just 31.02% for the same period — highlight the need for greater transparency, he said.
The fund’s problems stem from derivatives that went sour — derivatives that investors in the fund may not have understood.
It would behoove the SEC to head off such embarrassments before they happen, Mr. Phillips said.
One way to do that is to ask more questions of fund companies and demand more transparency.
It’s something Ms. Shapiro won’t be afraid to do, he said.