As the new executive director of the Mutual Fund Directors Forum in Washington, Susan Ferris Wyderko hopes to help independent fund directors do their job better and increase the not-for-profit organizations responsiveness to directors needs. This is her first job out of public service in more than two decades, although she believes her new role allows her to continue to indirectly serve the best interests of the investing public.
Wyderko is perhaps best known for her service at the Securities and Exchange Commission, having joined the top U.S. securities regulator in 1985 as a staff attorney. Most recently, Wyderko served as the director of the office of investor education and assistance from March 2000 through January of this year, when she was tapped to be the acting director of the division of investment management. She agreed to assume the temporary role previously held by Paul F. Roye from 1998 through 2005, when he left the SEC.
In April of this year, the SEC announced that Andrew Donohue, global general counsel for Merrill Lynch Investment Management, would permanently assume the directors role beginning in May. Wyderko left the SEC in June to join the Mutual Fund Directors Forum the following month. Wyderkos past service at the SEC also included serving as the director of the office of legislative affairs as well as serving as counsel to former SEC Chairman Arthur Levitt.
Wyderko recently spoke to Money Management Executive Editor-at-Large Lori Pizzani about her past work and her future goals. An edited account of their discussion follows.
MME: Why did you leave the SEC to become executive director of the Mutual Fund Directors Forum?
Wyderko: Deciding whether or not to leave the SEC was difficult. I enjoyed the issues that we dealt with. I learned the impact of good corporate governance standards, and I was comfortable in the role of investor advocate. Now I am working in the best interest of both investors and fund directors who have a desire to be independent and want to be well informed.
MME: What are the three most important things you learned over the course of your career with the SEC?
Wyderko: I learned firsthand how committed and dedicated the SEC staff and commissioners are to balancing the needs of shareholders and promoting efficient capital markets and capital formation.
I also learned how important investor confidence is to the functioning of our economy and to creating an atmosphere of good corporate stewardship.
Throughout my career at the SEC I learned how closely a good regulatory framework and good corporate governance standards are tied. Our structure and standards have produced the most liquid capital markets in the world. Ive spoken with representatives of other countries who come here to learn of our structure and regulations and about the strength of our capital markets.
MME: Did you gain a different perspective on the fund industrys challenges once you became acting director?
Wyderko: Absolutely. I became acutely aware of how important it is for a regulator to act in a timely manner and how difficult it can be to act on the diverse needs of the fund industry.
MME: Did it surprise you that, generally, retail fund investors did not react more assertively to the mutual fund scandal?
Wyderko: The mutual fund world has changed greatly over the past few years, and especially after the scandal. Published SEC information shows that boards were not informed of the egregious activities, and fund directors were not pleased. Neither were investors. I spoke to them, and they were outraged by the activities. But it did not surprise me that many investors didnt react because the issues, while understood by those of us in the Beltway, were not all that clear to individual investors.
Many investors hold funds through their retirement plans where investors could not easily move their money elsewhere. But from a practical standpoint, many investors were not greatly impacted individually. Shareholders in general were impacted, but the effects in many cases individually were small. Im of course not downplaying the seriousness of the egregious acts.
The scandal did impact investor confidence, but not for long because of the swift actions of the SEC and Congress. The effects could have been more prolonged and worse than they were.
MME: Do independent directors need to do more, and if so, what can the forum do to ensure that mutual fund advisors stay on the straight and narrow?
Wyderko: I personally believe that the majority of fund advisors are focused on the best interests of investors. Its clear that fund directors now view their roles as vital. Well-informed directors can be valuable to mutual funds seeking the best outcome. The forums mission is to provide education and foster the best interests of investors. Independent directors are interested in learning about practical ideas that they can take back to their boardrooms.
MME: What goals have been set out for you at the forum and how will you leverage your SEC experience?
Wyderko: My personal goal is to grow the forum, not in terms of numbers, but to ensure that it provides education for fund directors and is an effective vehicle for independent directors to express their views and concerns on various policy issues. I want us to get together to craft the industry standards just as the forum did in 2004 with its best practices that resulted in ways to tackle tough problems.
I expect to use the knowledge and experience Ive gained with the SEC to grow this organization and make it more important.
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