Investment funds get permission to hide fees from investors

What it does

This bill allows registered investment companies (mutual funds, closed-end funds, etc.) to exclude certain fees they pay indirectly when investing in business development companies (BDCs) from their disclosed 'acquired fund fees and expenses' on regulatory forms. In practice, this lets investment funds hide a category of costs from investors who rely on fee disclosures to compare fund performance and expenses.

Why we flagged it

The bill's operative mechanism is a narrow exemption from SEC fee-disclosure rules that benefits investment fund managers by allowing them to present lower stated expenses to investors. It is not a broad deregulation but a targeted carve-out for a specific fee category.

What the text implies

• Investors comparing funds using the standard fee table will see artificially lower expense ratios for funds that invest in BDCs, making those funds appear cheaper than they actually are relative to competitors.
• The omitted fees still exist and are still paid by investors indirectly; they are simply removed from the standardized disclosure that regulators and the industry use to ensure comparability.
• BDCs (which invest in small businesses and are themselves less liquid and higher-risk) may become more attractive to fund managers seeking to lower their disclosed fee profiles, even if the indirect costs to investors are substantial.
• Retail investors without access to detailed prospectuses or financial-advisor guidance may be systematically misled about true fund costs, widening the information gap between institutional and retail investors.

Section numbers refer to the bill text the analysis read — linked under Primary records below.

Who it affects

Ordinary investors rely on fee disclosures to evaluate fund costs and make informed investment decisions. Permitting funds to omit a category of fees from the standard disclosure table obscures true costs, making it harder for retail investors to compare funds fairly or understand what they are paying. The bill benefits fund managers (who can present lower fee figures) at the expense of investor transparency.

Who stands to gain

• registered investment companies (mutual funds, closed-end funds)
• business development companies (BDCs)
• fund managers and advisors (lower disclosed fees improve marketing and competitiveness)

Named in the bill

Securities and Exchange Commission (SEC), registered investment companies, business development companies (BDCs), Investment Company Act of 1940, Form N-1A, Form N-2, Form N-3

Where it stands

17 cosponsors: 9 Democrats, 8 Republicans.

• May 20, 2025 — Introduced · Congress.gov: “Introduced in Senate”
• May 20, 2025 — Referred to Senate Committee on Banking, Housing, and Urban Affairs · Congress.gov: “Read twice and referred to the Committee on Banking, Housing, and Urban Affairs”

Dates and quoted wording are Congress.gov's action record; the timeline shows status changes, not every procedural step.

Money around this bill

6 lobbying clients named this bill on 12 disclosure filings across 3 quarters, Dec 2025 to Jun 2026. Those filings disclosed $58,850,770 in lobbying spend. A filing names 8 bills on average, so that figure is what each filing reported, not a share belonging to this bill.

More lobbying clients named this bill than 82% of bills with at least one filing.

Dave McCormick, the sponsor, reported $690,750 in PAC receipts in the 2026 cycle.

• Chamber of Commerce of the U.S.A. — $54,660,000 on 3 filings
• Investment Company Institute — $2,106,510 on 2 filings
• American Investment Council F/k/a Pegcc — $1,614,260 on 2 filings
• Future Standard — $260,000 on 2 filings
• Blue Owl Capital Holdings LLC — $160,000 on 2 filings

Lobbying Disclosure Act filings through Jul 20, 2026. A filing shows who paid to lobby on a bill it names, not what changed.