While the Securities and Exchange Commission continues to receive comment letters on the independent chairman rule--and has yet to indicate when it might reach a decision on the hotly contested matter--those pro and con the measure continue to speak out, the Associated Press reports.
Meyrick Payne, a senior partner at fund governance consultancy Management Practice, believes the requirement to have 75% of a fund board, most notably the chairman, independent of the fund company will do an effective job of "separating the regular chief executive from the chairman." And John Bogle, founder of Vanguard, maintains it most assuredly will lead to lower, and fairer, management fees, which will be good news for investors: "The data overwhelmingly shows that the more that managers as a group take, the less that fund shareholders as a group make," he said.
And in a comment letter to the SEC, Bogle went even further, saying, "Since an executive of an investment advisor who serves as a fund director has a profound and direct conflict of interest that cannot be simply disclosed away, I continue to believe that 100% of the board should be independent."
But others, including the U.S. Chamber of Commerce--twice, successfully, before the courts--have argued that the new rule is costly and that is no proof that having an independent chairman benefits investors. Some even say that having an independent chairman will stifle the creation of new products and that management can do a far better job of running mutual funds than outsiders.
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.