The Commodity Futures Trading Commission has launched a probe into fees charged by managed futures funds.
Outgoing commissioner Bart Chilton said the agency was moved to act after Bloomberg Markets reported last month that of $11.51 billion in profits generated by 63 managed futures funds, 89% was eaten up by expenses and fees.
"Of all a regulator's duties, first amongst those should be safeguarding consumers," Chilton said. "That includes highlighting, and possibly banning, excessive fees that can gobble up profits."
"The problem is I don't think investors understand this," Chilton told Bloomberg News. "We need to do something about that."
Managed futures fees are also getting scrutiny from Capitol Hill, where the U.S. Senate Special Committee on Aging has urged the SEC and CFTC to work together on creating new fee disclosure requirements for retirement accounts run by managed-futures funds.
For his part, Chilton, who was set to leave the CFTC by the end of the year, said he would stay at the regulator beyond Dec. 31, both to assist with the agency's transition—Chairman Gary Gensler will depart at the end of the year, and his successor, Treasury Department official Timothy Massad, has not yet been confirmed. He also said the managed-futures probe won't depend on his presence.
"The inquiry won't end when I leave," he said.
President Barack Obama yesterday nominated Sharon Bowen to succeed Chilton. Bowen is a securities lawyer at Latham & Watkins.