Mutual fund boards known for their clubby atmospheres may soon turn to professional headhunters as a means of recruiting individuals who meet new standards of independent directors, Dow Jones reports.
Employing professional recruiters to staff mutual fund boards amounts to a sea change in a culture of hiring practices based largely on personal relationships. Shareholder advocates say current atmosphere of familiarity in boardrooms is charged with nepotism that has fueled the recent wave of scandals.
New rules proposed by the Securities and Exchange Commission calling for independent directors to occupy at least 75% of mutual funds' boards potentially creates a feeding frenzy for professional recruiters. Even if the proposed SEC rule fails to see the light of day, fund boards are still feeling pressure from regulators and shareholder advocates to look beyond their personal address books to find new members.