The Securities and Exchange Commission has granted its first no-action letter easing the personal holdings requirements for independent directors of a fund's investment advisor. The decision puts the SEC's treatment of independent directors of a fund's investment advisor on more equal footing with the independent directors of a mutual fund company.

The no-action letter excuses the independent directors of Mackenzie Investment Management and Mackenzie Financial Corporation, the advisor and administrator to the Ivy Funds of Boca Raton, Fla., from having to disclose holdings as they purchase them and in annual reports.

Mackenzie's independent directors won't be totally exempt from disclosing personal securities holdings, however. They will still have to disclose these holdings each quarter, an SEC official noted.

Independent directors of mutual fund companies will continue to be exempt from making initial, quarterly and annual disclosures of personal holdings, the SEC official said.

Mackenzie made the request to ease the reporting burdens on its seven independent directors, said Joseph Fleming, a partner with Dechert Price & Rhoads of Boston, Mackenzie's legal counsel.

"We believe that such an unnecessary burden and invasion of privacy of the independent directors should be avoided, so that highly-qualified individuals are not discouraged from serving in such a position," Fleming wrote in an Aug. 3 letter to the SEC.

Mackenzie had come to believe that such disclosure was making it difficult to "attract independent directors with a fair amount of experience," Fleming said in an interview.

Having independent directors serve on a fund's advisor or administrator is becoming more and more common, and is something that investors, particularly institutional investors, look for, Fleming said.

Fleming said he was pleased with the SEC's decision and hoped that eventually, the SEC would "put advisor independent directors totally on the same plane as fund company independent directors."

Fleming noted that the SEC only began requiring independent directors of investment advisors to report personal holdings as they initially make the purchases and in annual reports, six months ago. The SEC's Aug. 8 no-action letter "rolls back that decision to the status-quo of six months ago," when independent directors of investment advisors had long been required to disclose holdings each quarter, Fleming said.

The SEC has never extended the same liberal holdings privileges to independent directors of investment advisors as it has to independent directors of fund companies only because the commission has concentrated on fund companies, not investment advisors, the SEC official said.

"The Investment Company Act doesn't really deal with advisors," the official said.

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