Computer Glitch Compromises Shareholder Information

A computer glitch at a Computershare Web site, www.vote.proxy-direct.com, made it possible for mutual fund shareholders to vote proxies under other people's names, Dow Jones Newswires reports. The mistake also left personal information available online, compromising shareholders.

Security expert Bruce Schneier discovered the problem and made it known on his weblog, "Schneier on Security." Shareholders with valid proxy numbers could simply add more digits and get access to another person's information, including their ability to vote, Schneier found.

Computershare said that it was not clear how many fund companies were affected by the mistake, but that it did not have a negative impact on anyone and has since been corrected.

But some insiders believe there should be more rules governing the proxy-voting process. "The market-timing scandal taught us that there are corners of the fund industry that aren't explored well," said Roy Weitz, publisher of FundAlarm.com. "If we're serious about shareholder democracy and mutual funds, we need to be serious about the integrity of the system."