Mutual funds are highly regulated by the Securities and Exchange Commission (SEC) under the implementing rules and regulation of the Investment Company Act (RA 2629). These funds are prohibited from investing in particular investment products and engaging in certain transactions that may jeopardize the welfare of the investors. 

Only distributors and salespersons that are registered with the SEC are allowed to redeem these funds. Mutual fund houses are also required to submit regular reports to the SEC as well as to their shareholders. In addition, all of the assets of a mutual fund must be held by a custodian bank for safekeeping.