The Independent Directors Council, an offshoot of the Investment Company Institute, will issue a report next week on how mutual fund boards should conduct annual self-reviews, Dow Jones reports. The SEC is requiring fund boards to conduct these annual checkups starting in 2006. Some in the industry have said the SEC has not provided many details on how funds should comply other than that they should look at whether they oversee too many funds and have effective committees. "What's awkward about this is that the SEC has mandated [it] but doesn't give any clear direction," commented Geoff Bobroff, an industry consultant.
However, Michael Rosella, a partner with Paul, Hastings, Janofsky & Walker, said his firm has advised fund boards on how to keep complete records on their deliberations and actions taken.
What's important to remember, said Peter Meenan, chairman of the Independent Directors Council that developed the guidelines, is that fund boards do not have to reveal the content of their review, only to report to the SEC that they have successfully conducted the review. "One of the sensitivities is that if boards are going to be appraising themselves and doing it in a candid and open way, they're going to want to preserve the confidentiality of their discussions," Meenan noted.
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.