|
Full Board
|
|
Written by C. Meyrick Payne of Management Practice Inc., a consulting firm focused on the needs of independent
|
One of the most important of the ICI's Advisory Committee on Best Governance Practice is that Board periodically evaluates its performance. In spite of this recommendation, the process has not been fully embraced partly because of fear that any written document which is even slightly critical might be used by the plaintiff's bar to bring a lawsuit against the directors. The ICI Advisory Committee was deliberately vague about the measures and criteria to use because each board is quite different and faces different set of priorities. Now the SEC is set to require a similar process. The time has come to delve into the philosophical foundation of a realistic Board evaluation.
Several years ago a well known financial planner came up with an evaluation method which tried to correlate certain elements of governance with fund performance, expense control and investor service. This index became known as the Mutual Fund Board Index (MFBi). While arithmetically correct, the MFBi was misleading because it was based on historical data and assumed that fund directors had control over investment performance. Additionally the index assigned grades and expressed them in rank order which meant that a board which had strong oversight procedures might score badly because fund performance was poor. The experience with MFBi unnerved directors and counsel alike.
|
|
Read more...
|
|
|
Full Board
|
|
Written by John Winthrop, Independent Trustee of the Pioneer Funds
|
The concerns of independent trustees of investment companies are growing. The number of responsibilities seems to be increasing; the assignment is becoming more complicated.
In 1940 there were only 68 mutual funds, according to The Mutual Fund Fact Book published by the Investment Company Institute. In 1972 there were 361 funds. Thirty years later, at the end of 2002, there were 8,256 funds. Those of us who have been involved in this growth industry over the past three decades now live in a very different world.
|
|
Read more...
|
|
|
Full Board
|
|
Written by C. Meyrick Payne, Senior Partner, Management Practice Inc.
|
|
Arthur Levitt may have become even more influential now that he is no longer Chairman of the SEC. Certainly his book, Take on the Street, is influencing legislators and regulators in the post-Enron era. His chapter detailing the "seven deadly sins" of the mutual fund industry is particularly damning. Whether a diligent fund director agrees or disagrees, it would be foolhardy to dismiss Levitt's criticism as ill-informed or casual. This MPI Bulletin begins to answer the question "What should fund directors do about them?"
|
|
Read more...
|
|
|
Full Board
|
|
Written by C. Meyrick Payne, Partner Management Practice Inc.
|
The lesson of the Canary Capital scandal for mutual fund directors is that they need to have even more authority over the compliance function, spend more time understanding the economics of the asset management business and perhaps even be additionally compensated for their time and attention. Of course, there is no point if they are not truly independent of the management company. The worse result possible would be if investors, regulators and industry experts just threw up their hands, declared fund governance ineffective, and went about replacing fund directors with an army of Federal and State regulators. Independent oversight has worked well for over 60 years. The job post-Canary is to strengthen governance, not tear it down.
The first step in this task is to identify the point at which the governance system fell apart. Late trades are illegal and anyone with knowledge that such trades were being executed is in trouble. So the first question is, "Did the fund directors know that late trades were being booked?" There is no indication in Eliott Spitzer's complaint that the directors knew.
|
|
Read more...
|
|
|
Full Board
|
|
Written by Neil L. Diver, former trustee of the SIFE Funds whose investment advisor was sold to Wells Fargo
|
|
The sale of a mutual fund investment advisor causes the independent trustees to assume unique but very important responsibilities to discharge their obligations to the fund's shareholders. This Bulletin discusses the typical motivations that cause the advisor to consider selling and highlights the duties of the independent trustees before and during the sales process. A successful sale is a time-consuming, emotional, and lengthy deviation from business as usual for the advisor and independent trustees, which, if not managed adroitly, may negatively impact the fund shareholders and the advisor's value.
|
|
Read more...
|
|
|
<< Start < Prev 11 12 13 14 15 Next > End >>
|
| Results 61 - 65 of 73 |
