The Associated Press

The investigation into mutual fund trading abuses has focused attention on fund fees and put pressure on regulators to improve disclosure.

Critics ranging from consumer watchdog groups to Washington politicians have complained for years that funds provide too little specific information about fees to shareholders and in a format that is difficult to understand. They want the Securities and Exchange Commission to require funds to provide shareholders with customized statements showing how much each individual paid for fund services that year.

They also want a more specific itemization of how fees are being spent, and they want fund boards to reveal the rationale behind a fund's fee structure. The more information that investors have, they contend, the easier it is for them to make better decisions.

The SEC has indicated it will not pursue a customized fee statement for individual shareholders because prospectuses already include hypothetical examples of costs that the commission says provide a more meaningful comparison for investors deciding between funds.

Instead, the commission has focused on curbing payment practices it thinks are misleading. The commission has proposed requiring funds to disclose to investors any payments made to brokerages to steer business their way. An SEC investigation found several cases in which brokerage firms steered investors toward certain funds in exchange for payments, without telling the investors.

Regulators have also proposed requiring funds to do a better job of informing shareholders of and enforcing breakpoints - discounts that investors receive for certain sizes of investments.

The SEC has said it does not think fee reductions should be part of any of the settlements reached in the current fund trading scandals - saying market forces, not regulators, should be the impetus for funds to lower fees. New York Attorney General Eliot Spitzer does not agree. Last year, he persuaded Alliance Capital Management to reduce its fees by $350 million over 5 years in addition to $250 million in restitution.