Mercer Bullard, founder of Fund Democracy, doesn’t expect the Securities and Exchange Commission to pass the controversial rule that would require fund companies to have 75% of their boards, including the chairman, be independent, MarketWatch reports. But that isn’t stopping him from pressing the SEC to do what he believes is the right thing.
If funds were run by impartial boards, Bullard said, they would inevitably negotiate lower fees “and ensure that as much money as possible is being spent to benefit shareholders and not simply to distribute more fund shares or to line the fund manager’s pockets through different kinds of kickbacks.”
Most notably, Bullard notes that empowering a chief compliance officer who reports to an affiliated chairman of the board negates the whole reason for putting a CCO in the position in the first place. “So you literally have a reporting system where the chief compliance officer is keeping an eye on the hen house and then going to report to the fox,” Bullard said. “That is the best reason to require an independent chairman.”
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.