The head of the worlds No. 1 mutual fund company said on Tuesday that forcing firms to hire independent chairmen might not be the end-all solution to fixing problems in the industry.
In an op-ed article published in Tuesdays Wall Street Journal, Fidelity Investments CEO Edward Johnson III argued outsiders are not always best suited to head up a company.
"The governments argument that independents are the silver bullet to prevent abuses just isnt supported by the facts," said Johnson. He said that if a person has his or her own money invested in the company, as Johnson does himself, the commitment to helping that company succeed might be greater than it would be for an independent person.
Regulators have suggested that independent chairmen may be the answer to the late-trading and market-timing problems that have slammed the industry, problems that Fidelity itself has not yet been associated with.
"If this rule is adopted," Johnson wrote, "the immediate result will be to reduce the expertise and hands-on feel of mutual fund board chairs across the industry, whose long experience equips them to detect subtle nuances in fund operations."
He added that every company is different, writing, "If an independent chairperson is right for one company, fine. If at another company, based on the judgment of an independent board, an interested chairman is elected, then that, too, should be fine."