SEC Proposes Controversial Fund Rules

Washington (Jan. 16, 2004) -- The Securities and Exchange Commission proposed a number of controversial rules this week aimed at improving disclosures to investors and making mutual fund boards more independent, including one that would require that board chairmen be independent directors.

The proposals included a requirement that 75 percent of a fund's board (compared to a majority now), and all board chairs, be independent directors. Boards would also be required to assess their own effectiveness at least annually. The commission also proposed that independent directors meet separately at least once a quarter, and that independent directors be authorized to hire staff to help them with matters requiring “outside assistance.”