The Securities and Exchange Commission has proposed additional rules to regulate mutual fund audit committees more closely; the regulations are the result of the Sarbanes-Oxley Act, which President Bush signed last summer in response to rampant scandal on Wall Street.
Specifically, the commission said that firms will be required to disclose the number of financial experts who serve on a company's audit committee, as well as their names. Complexes will also have to certify that those experts are "independent of management," the SEC said in a statement.
Firms will also have to disclose whether they have adopted a code of ethics governing top executives. If a firm has not adopted an ethics code, it must explain why. In addition, companies must regularly disclose amendments to such codes, as they relate to top officers.
The SEC defined a code of ethics as a document that governs, among other factors, conflicts of interest, disclosure of reports and documents to the commission or the public and prompt internal reporting of code violations.
