Investment company director responsibilities in the wake of recent regulatory action

Abstract

In the wake of the market timing, late trading, and conflict‐of‐interest‐related scandals in the investment company industry, the Securities and Exchange Commission (SEC) recently adopted rules and rule amendments designed to enhance the governance practices of registered investment companies, or “funds.” In an effort to protect shareholders and reduce conflicts of interest between fund boards and fund investment advisers, the SEC has adopted rules that, among other things, increase the required disclosure regarding approval of investment advisory contracts and prescribe the composition of and processes for fund boards. Under these new rules, funds that rely on certain SEC exemptive rules will be required to comply with new governance standards such as having an independent board chairmen and a 75% independent director majority and conducting annual board self‐evaluations. This article addresses the responsibilities fund boards will face in the wake of these new rules.

Citation

Helm, R.W. and Johnson, M.C. (2004), "Investment company director responsibilities in the wake of recent regulatory action", Journal of Investment Compliance, Vol. 5 No. 2, pp. 23-28. https://doi.org/10.1108/15285810410636145