Following the Securities and Exchange Commission's new requirements regarding mutual fund boards and independent trustees, the Mutual Fund Directors Forum, at the request of SEC Chairman William Donaldson, has weighed in with its own set of 32 best practices. Donaldson made the request in November, just 2-1/2 months after the fund scandal broke, at a point when the SEC was finalizing a flurry of regulatory proposals to enhance board members' independence to stem further abusive activities.
Led by the Chairman David Ruder, a professor at the Northwestern University School of Law and an SEC chairman from 1987 to 1989, the forum was originally convened in 1999 as the Mutual Fund Directors Educational Council and reorganized in 2002. While some of the forum's best practices are now SEC requirements, most are merely recommendations. However, they are worth noting, said Allan Mostoff, forum president and former head of the financial services practice at Washington law firm Dechert. The Investment Company Institute came out with 17 governance standards in June 1999 and October 2003, but the forum's sole focus is independent directors, Mostoff said.