As With Mutual Funds, So With Hedge Funds

Stevens said that while the ICI “strongly supports” the SEC reexamination of how mutual funds are regulated, the road ahead “will be demanding and test us in new ways.” Since the mutual fund trading scandals began to surface last September, he said, the SEC has issued 16 new rules that affect mutual funds, 12 of which are “a direct result of the trading scandals.” The ICI has even given its okay to the SEC’s controversial rule requiring board chairmen of mutual funds to be independent, which was adopted June 23. The SEC rule says that 75% of the board members must now be independent of the fund company, independent directors must meet quarterly without fund executives, and that the board must have annual self-assessment meetings.

A recent poll of brokers, financial advisors, and bank reps performed by MFS Investment Management found that these groups endorse the SEC’s rule that fund boards have an independent chairman, as well as the SEC’s rule to prevent late trading after 4 p.m. But these groups were divided on their support for the SEC’s proposals on mandatory fees for fund redemptions, bans on soft dollars for research, and the elimination of 12b-1 payments.