A former top Securities and Exchange Commission official predicted yesterday that the agency will soon call on tax-exempt money market funds to better diversify their portfolios and to improve disclosure to shareholders and investors.

"I don't have a crystal ball or a final say in this anymore," said Kathryn McGrath, former chief of investment management at the SEC. "But I think we all have to be prepared to see some major changes coming in terms of the regulatory front that may make it tougher for money funds to operate," said Ms. McGrath, speaking at an industry conference on municipal money funds in New York.

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