If you can't join em, beat em! That's the seemingly backward battle cry from Irving Straus, the chairman of Straus Corporate Communications of New York.

Straus, who had been on a one-man crusade to snare a job as an independent director for a mutual fund board or two, has changed his tactic. He is now developing a matchmaking service that will marry qualified fund director candidates with mutual funds hungry to secure new independent trustees in light of the new SEC requirement that 75% of a fund's board members be independent of management.

At age 83, Straus considers his five decades of fund industry experience to be a valuable asset to a variety of fund advisors. Interested in parlaying this experience, Straus wrote letters to several fund groups offering to serve on their fund boards. He even took out a situation wanted ad in a popular weekly financial news publication.

But that fishing expedition proved futile. Although he did receive some letters back acknowledging his impressive credentials, most firms said they already had their quota of independent directors, or explained their age cut-off for board members was 70 or 72. A few said that although they couldn't offer him a board seat, they might consider him for a spot on the fund group's less formal, non-voting advisory board.

Revising his strategy a bit, Straus took out another classified ad in the June 28 issue of Barron's. The ad, an open call to all fund companies and independent director wannabes, offered to confidentially find and place mutual fund independent directors.

Almost immediately, Straus received more than two dozen e-mail responses and resumes, all from highly qualified candidates including ex-fund managers and directors, and some current executives, Straus said. Perhaps not so remarkably, not one fund company responded to the advertisement.

"The problem is not finding people, but getting fund managers to look beyond their noses," said Straus whose experience includes serving since 1998 as one of three independent trustees for the two mutual funds managed by Atalanta/Sosnoff Capital Corp. of New York.

The long-honored mindset among fund managers of choosing a candidate because he is a friend, a high-profile personality, or executive expert in an unrelated field is no longer going to cut the mustard and definitely is not in keeping with the spirit of the SEC's new rules, Straus said. "What's missing is fund management making the effort to put mutual fund credentials as the No. 1 priority in filling their new director needs," he said. Hands-on mutual fund experience should be the top criteria, he said.

Moreover, Straus contended, age is a benefit, not a liability, to fund boards. "In the mutual fund industry, the experience and wisdom of age is a priceless qualification for directorship," he said. "I would venture that had there been more 70- and 80-year-olds on fund boards, some of the recent scandals might never have occurred," he said.

While it is the investment advisor that often recommends new candidates for the fund board to consider, it's the fund board itself that sets the specific criteria for director nominees, said Meyrick Payne, partner with Management Practice of Stamford, Conn., a mutual fund board consulting firm.

The No. 1 issue most boards seeking candidates are grappling with now is finding people who have the time to serve on the board and tackle the multitude of board duties, Payne said.

Secondarily, boards typically seek new directors who have complementary expertise to those already serving in the boardroom. "They look ahead five years to determine potential problems," he said.

But boards also consider geographic viability, Payne noted. There are lots of meetings to attend, especially for new directors. Additionally, sitting board members consider personality types and whether a new trustee will be compatible with the current team of independent directors, he said. In light of the industry scandal and the return to clearly representing the interests of the retail fund investors, of utmost importance now is finding someone who relates well to the end customer, Payne said. That's a major change from fund boards previously seeking new trustees fluent in industry law.

With the obvious regulator-inspired power shift into the hands of fund boards, "now, more than ever you had better intimately know who your board members are," said one West Coast fund company president. "Some can get way afield, and now that they've been empowered to hire staff, a board member on a power trip can spell trouble."

Copyright 2004 Thomson Media Inc. All Rights Reserved.

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