US legislators have approved a draft law aimed at stamping out irregular trading in the mutual funds industry.
The mutual funds industry is worth $7 trillion
The House of Representatives on Wednesday voted in favour of the bill by 418 to 2.
The measure explicitly bans trading practices which have benefited Wall Street insiders at the expense of ordinary investors.
It is designed to protect millions of Americans who place their long term savings in mutual funds.
Representative Richard Baker, the Louisiana Republican who proposed the bill, said it would ensure that "all the rules will be applied equitably to all investors."
Under the bill, investors would be barred from late trading in mutual fund shares, where professional investors buy stocks after hours in the expectation that overnight developments will boost their price.
Ordinary investors wishing to buy after hours are obliged to do so at the following day's opening price.
But some fund managers, contrary to existing rules, have allowed insiders to buy at the same day's closing price.
The measure prevents investors from short-term trading in their own fund shares, a practice which erodes returns for long-term savers.
It also obliges fund managers to provide customers with more information on fees, and on their links with Wall Street brokers.
A separate bill aimed at eliminating mutual fund abuses is expected to come before the US Senate next year.
The Securities and Exchange Commission (SEC), the US markets watchdog, has also unveiled draft measures designed to clean up the industry.
The rush to crack down on mutual funds, which handle the savings of an estimated 54 million American households, follows revelations of widespread irregularities, prompting many consumers to withdraw their money.
Some funds have already been brought to book, with Morgan Stanley agreeing last week to pay $50m to settle an SEC investigation into its mutual fund business.
Putnam Investments, a leading mutual fund, has also struck a deal with the SEC, although a settlement payment has not yet been set.
But New York attorney general Eliot Spitzer, who last year led a high-profile crackdown on dubious practices by Wall Street equities analysts, has criticised the SEC for being too lenient.
Mr Spitzer is conducting his own investigation into the mutual funds industry.