VOL. XXIII, NO. 9 / September 2014
Intelligence on Governance and Compliance for Fund Trustees
The monthly issue from Fund Director Intelligence
www.funddirectorintelligence.com
Is Popejoy Off PIMCO Funds Board Following
Gross Criticism?
In This Issue
Directors Prepare
For Alts Exams
The Securities and Exchange
Commission’s examination of
alternative mutual funds is under
way, and boards can start preparing
thanks to the direction provided by
the regulator. Leverage, liquidity and
valuation are the areas of focus, the
agency has said.
Independent director William Popejoy from PIMCO Funds, who earlier this
year was publicly critical of firm co-founder Bill Gross, has resigned his
position, according to a recent filing by the funds. However, Popejoy’s lawyer
declined to confirm his resignation or the status of the relationship between
the two parties. Popejoy began serving on the PIMCO Funds board more
than 20 years ago.
Popejoy lashed out at Gross’ reported $200 million annual salary in an
interview with the Los Angeles Times published March 11, calling his reported
(continued on page 10)
See story, page 3
A New Director At Ariel
IN THE BOARDROOM
The Ariel Investment Trust board
has brought on independent
director Kim Lew, who ultimately
will fill the seat vacated by lead
independent director Royce Flippin
when he retires at the end of the
year.
Walden Funds Board Policy Review
Triggers Self-Governance Changes
See story, page 9
Matthews Asia Names Chair
The board of Matthews Asia Funds
has named a new independent
chair to replace Geoffrey Bobroff,
who passed away in July. Jonathan
Zeschin officially took over the role
on Aug. 27.
See story, page 9
Governance3
Regulatory7
People & Funds
9
Learning Curve
12
The board of The Boston Trust & Walden Funds is in the process of
adopting a series of new self-governance rules following a months-long
review that compared board policies and procedures to industry best
practices. Using the Independent Directors Council’s latest survey on fund
governance practices for reference, a two-member committee identified five
areas to be scrutinized.
(continued on page 4)
New Challenges Emerge
With Money Fund Reform
Industry professionals are uncovering
new challenges for chief compliance
officers and fund boards buried in the
long-awaited 869-page money market
mutual fund reforms the Securities
and Exchange Commission approved
in July.
In essence, the reforms require certain institutional prime funds to trade at
(continued on page 5)
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Fund Directions The monthly issue from Fund Director Intelligence Editor’s Note
It’s only been a little over a month since the Securities
and Exchange Commission adopted new money
market fund rules, and the analysis is well under way.
For boards, much of the focus initially was on procedures
regarding the liquidity fees and gates option. Now that
lawyers are beginning to delve into the weeds of the 869page release, they’re identifying other areas that independent directors
and others ought to pay attention to. Screening investors is one area in
which boards are likely to get involved, and others include valuing certain
money market securities and more thoroughly overseeing pricing services
and the methods they employ. It’s going to be a busy two years ahead of
implementation, and advisers and boards are being urged to work closely
together through the process.
Meanwhile, independent directors are gearing up for the fourth quarter
as another summer comes to an end, looking at their responsibilities
related to cybersecurity and alternative investments. The board of The
Boston Trust & Walden Funds has recently completed a review of its
governance practices and is in the process of implementing changes,
and on the personnel side, the boards of Ariel Investment Trust, MFS
Mutual Funds and Matthews Asia Funds all have made changes—
including a new independent chairman at Matthews following the
death of Geoffery Bobroff in July. At PIMCO Funds, the lineup also is
changing—and not without controversy. William Popejoy appears to be
off the PIMCO board, just months after he caused a kerfuffle by criticizing
Bill Gross in a Los Angeles Times article. No one’s talking, but we’ve got
the bare scoop anyway.
Elsewhere on the regulatory front, SEC Commissioner Daniel
Gallagher has suggested that further guidance on the use of proxy
advisers may be necessary, and a group of senators has approached
Treasury Secretary Jack Lew and urged transparency on systemically
important financial institution designation.
In this month’s Learning Curve, Compliance Science’s Mitchel
Kraskin and Invesco’s Todd Spillane explore fund governance risk and
compliance exposure and how technology, compliance and boards can
work together. Be sure to check out the calendar of events to plan the rest
of your year, and take a trip down memory lane through One Year Ago
and Five Years Ago—it’s amazing how the more things change, the more
they stay the same.
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Fund Director Intelligence
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VOL. XXIII, NO. 9 / September 2014
Fund Directions The monthly issue from Fund Director Intelligence www.funddirectorintelligence.com
Governance
Pillsbury’s Finch: Assess Cyber
Risks Of Third-Party Agreements
As mutual fund directors familiarize themselves with
their funds’ exposure to cyber risks and their advisers’
policies and procedures related to cybersecurity,
they should pay special attention to third-party
agreements—especially those with cloud providers
or other IT service providers,
according to Brian Finch, partner at
Pillsbury Winthrop Shaw Pittman in
Washington, D.C. Those agreements
should address specific risks and
liabilities rather than simply containing
“boilerplate language,” he told FD.
Brian Finch
Such agreements often include
standard clauses where the IT vendor promises to
provide security in line with “industry standards, a
reasonable baseline or some other kind of general
loose language,” which should be replaced with more
concrete, specific requirements and benchmarks, Finch
said. While boards shouldn’t be “getting into the weeds”
of such agreements, they should be asking advisers
about them, he added. “What they should be doing is
asking questions like ‘What’s your process for vetting
third-party or outside vendors? Are you doing more than
simple boilerplate language?”
Moreover, boards should ensure that agreements are
examined on a regular basis to ensure language is up
to date, reflective of current trends and, where possible,
shifts liability and risk away from the adviser to the vendor.
“The pace of cyber threat is astounding,” Finch said,
warning directors to not seek a “solution” to the problem.
Firms can’t buy something or allocate a specific amount
of funds to the issue and expect the risk to disappear. “It’s
a sophisticated problem that’s constantly changing,” he
underscored. “It’s more about an ongoing process.”
Many boards have moved cybersecurity higher on their
priority lists in recent months (FD, June), and some have
begun assessing the types of insurance coverage that
may be available (FD, July). Finch said the issue should
become a regular, permanent agenda item for fund
boards, since cyber risks and threats will never disappear
but constantly change. He noted that some boards
have begun considering establishing subcommittees
VOL. XXIII, NO. 9 / September 2014
to address cybersecurity or hiring a dedicated cyber
advisor. “It’s a challenging issue, and it’s not a bad
idea to have a group of people focused on it,” he said.
Another approach is to stock the board with tech-savvy
directors—already a growing trend, Finch said.
SEC Alt Funds Probe Draws
Roadmap For Directors
The Securities and Exchange Commission’s recently
launched examination of alternative mutual funds is a
reminder to boards that their oversight of issues such as
liquidity, valuation, and the use of leverage is a focus of
the regulator, but the SEC’s approach this time around
enables directors to prepare for questions and scrutiny,
according to Rajib Chanda, partner
at Simpson Thacher & Bartlett. “We
have a roadmap,” he told FD.
The SEC’s Office of Compliance
Inspections and Examinations in the
spring said it would launch targeted
exams of 35-40 mutual funds that
Rajib Chanda
engage in hedge fund-like strategies
after identifying alternative investment companies among
its priorities for 2014 (FD, June). Since then, both Division
of Investment Management Director Norm Champ and
Associate Director Douglas Scheidt have given boards
and advisers specifics on the factors the Commission will
home in on during the exam sweep (FD, July).
“What’s sort of useful about the way this whole
sweep has come about is that they really have said
that there are a few areas where they are focusing; it’s
actually really useful...the fact that they’re saying ‘we’re
focusing on leverage, liquidity, valuation’,” Chanda
said. He compared this approach to that on distribution
payments (FD, March), which he called “worrisome”
because it is unclear what the SEC is looking for and
what industry practices may be deemed unacceptable.
Chanda said boards already are monitoring the
issues under scrutiny, so the concepts are not new,
even if there are different issues related to alts. “This
is a growing industry. A big portion of the mutual fund
industry is focusing on this as a result of consumer
demand, [and] it makes sense for everyone to
understand it,” he said, asserting that independent
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3
Fund Directions The monthly issue from Fund Director Intelligence directors shouldn’t necessarily fear the regulator’s
scrutiny. “I don’t know what the SEC expects to find;
here, there are rules and guidance and structures and
people abide by them,” he maintained.
Board Processes, Procedures Key
To Money Fund Rule Implementation
There is no doubt that boards overseeing money
market funds will be busy in the two years between
the Securities and Exchange Commission’s
adoption of new rules governing that market and the
implementation of those rules. The first step, market
participants agree, is to develop processes and
procedures (FD, August). Law firm K&L Gates offered
advice to directors on getting started in its latest
Investment Management Alert.
The SEC voted on July 23 to finalize the rules, which
require prime institutional money market funds to
transact at a floating net asset value, rather than a fixed
share price. The rules give fund boards a new way to
address runs by investors, empowering directors—at
their own discretion—to impose liquidity fees and gates.
If a fund’s level of weekly assets falls below certain
thresholds, a board will be able to impose up to 2%
fees on all redemptions from the fund. If a fund’s weekly
liquid assets drop below 30%, the board could impose
Walden Funds
(Continued from page 1)
The funds under the purview of the board adhere
to an environmental, social and governance (ESG)
investing mandate, and interested
director Heidi Soumerai told FD that
“it felt natural for us to take a step
back” and determine if the board
itself was employing the standards
the funds use to evaluate companies.
Soumerai, director of ESG research
Heidi Soumerai
at Walden Asset
Management, represents half of
the review committee. “The fact that
we hadn’t done a formal review, yet
we have ESG funds, seemed a bit
inconsistent,” explained independent
James Woodward
director James Woodward, who is
the other committee member. “It was a fairly detailed
4 www.funddirectorintelligence.com
a gate, temporarily suspending redemptions for up to
10 business days.
In their alert, Partner Diane Ambler and Associate
Craig Ruckman urged boards and advisers to coordinate
on implementation and develop protocols upon which
they can rely in times of market stress. “Boards should be
aware that the adopting release specifically contemplates
MMF boards making the relevant determinations under
the amended rule telephonically or through any other
technological means by which all directors can be heard,”
they pointed out. “In addition, the adopting release notes
that although an MMF may impose a redemption gate for
up to 10 business days, a fund is not required to impose
it for that long.” Money market fund boards should expect
to hold regular—possibly daily—meetings throughout any
time of stress in which liquidity fees or redemption gates
are imposed, Ambler and Ruckman said. “[They] may
want to identify in advance the appropriate standards to
analyze a fund’s liquidity.” When a fund imposes or lifts a liquidity fee or
redemption gate—or if it does not impose a liquidity
fee despite passing certain liquidity thresholds—the
board must file a report on the new Form N-CR, the
two lawyers noted. “MMFs will be required to disclose a
brief discussion of the primary considerations or factors
taken in account by the board in its decision to impose
or not impose a liquidity fee or gate.”
process,” he told FD.
Before launching the review, the board approved a
change to its hiring guidelines to add explicit language
that race and gender be considered when identifying
director candidates. While the Walden board had been
doing so informally already, “you need to have public
testimony of your commitment to a diverse board,”
Soumerai explained. For the review, she and Woodward
looked to the IDC survey to determine industry standards.
Woodward said the committee used the data published in
2013, which covered the 2012 calendar year. The two also
used the 2007 survey to look for trends. “Overwhelmingly,
we were operating in concert with best practices,” he said.
“But there were five areas in need of further discussion...
and we adopted some new policies as a result.”
The five areas on which the committee focused were:
1. Retirement policy. The Walden board had no
specific retirement age, though 67% of boards do—
© Institutional Investor, LLC 2014
VOL. XXIII, NO. 9 / September 2014
Fund Directions The monthly issue from Fund Director Intelligence up from 62% in 2007. “There is definitely a trend in
that direction,” Woodward said. The board now has a
mandatory retirement age of 75 (individuals must step
down at the end of the quarter in which their birthday falls)
with the option of one two-year extension if circumstances
call for continuity. The first director to be affected by the
change is Woodward himself, who turns 75 in November;
the board will vote in December on a two-year extension.
2. Percentage of independent trustees. Some
96% of boards are comprised of two-thirds or more
of independent directors, according to the IDC data.
“Clearly, it’s standard practice within the industry...We’re
at 60%,” Woodward said, noting that the number of
independent trustees—three—overseeing the funds’
roughly $2 billion in assets is in line with the norm. After
discussing it “extensively,” the directors decided they did
not want to enlarge the board. Rather, they will bring on
Woodward’s replacement at the end of 2015 so there is a
one-year overlap, during which time they can determine if
a larger board would serve shareholders better.
3. Fund share ownership. The Walden board
encourages but does not require independent directors
to own shares in the funds they oversee, yet 30% of
the industry does have such a requirement—up from
23% in 2007. “We will adopt a policy that requires share
ownership; you come on this board, you are expected
to own shares,” Woodward said, noting the policy will
be addressed at the board’s December meeting. No
minimum requirement has been set, though instituting
one continues to be discussed, he said.
4. Board evaluation. Nearly two-thirds of boards
have a written annual board self-assessment, up from
67% in 2007. The Walden board conducts an annual
evaluation of itself, though it does not participate in peer
assessments. “We looked into that and said no, we do
not want to change our annual assessment process,”
Woodward said, noting its existing practice is in sync
with the industry. Soumerai maintained that the directors
have strong relationships, and both she and Woodward
agreed peer assessments can be divisive.
5. Orientation of new independent directors. “We
have not had a formal process in the past; we’ve had
an informal process,” Woodward said. “The industry is
moving in the direction of having a formal process, and
we have agreed that new independent directors will go
through a formal orientation program.” The program will
be formalized in December and will involve visits to and
VOL. XXIII, NO. 9 / September 2014
www.funddirectorintelligence.com
presentations from Boston Trust personnel as well as
other providers to the funds.
“I think this was a very healthy thing for us to do,”
Woodward said of the review. Soumerai added: “It’s a
healthy thing for any fund board.” Both agreed that the
board will go through the process again, probably in five
years, and recommended other boards do the same.
Woodward, chairman of the board’s Nominating
Committee, said the search for a new trustee has begun
with the identification of some potential candidates
recommended by sitting board members. He said the
board is unlikely to consider candidates before its May
2015 meeting and possibly not until August.
New Challenges
(Continued from page 1)
a floating net asset value, rather than a stable $1 share
price, and give fund boards new tools to limit investor
redemptions in times of stress (FD, August). They
also create a number of subtler obligations that both
CCOs and fund directors will need to figure out how to
satisfy—such as how to keep institutional investors out
of retail funds and how to properly value securities.
Retail Fund Requirements
One of the key concerns CCOs may not yet have thought
through is how exactly to screen fund investors, Davis
Polk & Wardwell Partner Gregory Rowland told FD
sister service Compliance Intelligence. The SEC’s retail
fund definition, which requires funds to have policies
to ensure their investors are natural persons, “is easy
to write out on paper in the rule, but hard to implement
in practice,” he said. “It’s a whole new requirement for
broadly offered money market funds, which haven’t ever
had the need to screen investors in that way.”
Under the rule changes, retail and government
money market funds won’t have to switch to a floating
NAV and can continue to use amortized costs to value
their securities. To qualify as retail, a fund will have to
have policies and procedures “reasonably designed”
to limit investors to natural persons, while government
funds will be defined as those that invest 99.5% of their
total assets in government securities or cash.
Satisfying the retail definition will require fund CCOs
to coordinate with their intermediaries and brokers to
ensure they only let natural persons invest, Rowland
said, explaining that many of the people who buy these
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5
Fund Directions The monthly issue from Fund Director Intelligence funds don’t deal directly with the funds themselves,
instead investing through omnibus accounts held in the
name of the broker or other intermediary.
“The board also will have some role in the fund’s
procedures reasonably designed to limit all investors
to natural persons, which will be required for a retail
(stable NAV) fund,” Stradley Ronon Stevens &
Young Counsel Joan Swirsky told FD. “Since it will
be up to the board to decide whether to continue to
use amortized cost valuation or to switch to market
valuation, the board will need to understand whether the
procedures are reasonably designed.” The rules also
pose difficult questions to funds regarding what they
should do if an institutional shareholder ends up in a
retail fund, she said. “At what point are the policies and
procedures not considered ‘reasonably designed’?”
“I think you could have reasonable procedures that
don’t necessarily work in every single instance,” and still
qualify as retail even if an institutional investor ends up in
the fund, Rowland said. “But at the same time, the SEC
could say that once you have identified an institutional
investor in the fund, you have to have a way to remove
them. So I could imagine people starting to build terms
into their funds giving them the ability to do that.”
Valuation, Pricing
One of the key items that it has taken time for people to
notice in the rules is the new guidance on funds’ ability
to value securities at amortized cost, said Ropes & Gray
Partner Brian McCabe. In the past, funds have simply
valued securities with 60 days or less until maturity at
amortized cost. The new guidance still allows that practice,
but adds that funds also need to ensure that the amortized
cost approximates fair market value, McCabe said.
www.funddirectorintelligence.com
At first blush, that sounded fine, but now funds
are realizing that it is going to take a lot of work and
administrative expense to double check that amortized
costs are close to the market price for all of their
covered securities, McCabe said. CCOs and boards
are going to have to review their valuation policies and
likely will need to build out new procedures to review
amortized cost valuations, he said. “It’s not necessarily
an insurmountable burden, but people are definitely
going to have to do some work.”
For boards, it will mean becoming familiar with the
guidance in the new rules and considering what—if
any—impact the guidance should have for the funds’
valuation guidance and procedures, McCabe said.
“Most advisers are going to bring it to the board’s
attention...[but] if I were a trustee, I would look at the
valuation procedures myself to satisfy myself that it
makes clear how the securities are valued.”
Another area of note is the guidance regarding the
use of pricing services. The SEC advised funds that
they shouldn’t rely strictly on the valuations provided by
pricing services without exercising some due diligence
to try to understand the models upon which those
services are relying, McCabe said. He predicted boards
would be subject to more presentations from the pricing
services used by the funds they oversee.
Swirsky agreed that funds should take a look at that
particular passage and suggested it could lead to more
“kicking of the tires” to see how exactly the pricing
services are coming up with their figures. “There is very
interesting commentary in the release about the board’s
non-delegable duties to determine whether ‘evaluated’
prices provided by pricing services are reliable fair
values,” she said.
Got An Idea For A
Learning Curve?
These monthly 1,300- to 1,500-word features offer guidance and
instruction on how fund boards should handle a particular issue or topic.
Please send your ideas—or actual learning curve submissions—
to Managing Editor Hillary Jackson at [email protected]
Fund Directions The monthly issue from Fund Director Intelligence www.funddirectorintelligence.com
Regulatory
Obama Admin Nudges Senate
On Cybersecurity
The White House appears to have switched positions
on legislation designed to let mutual funds and other
financial institutions share information that would help
against future cyber attacks.
In a recent speech, Treasury
Secretary Jack Lew urged Capitol
Hill to act—in contrast to a 2012
presidential threat of a veto to a
similar bill because officials then felt
it threatened individual privacy. In the
Jack Lew
wake of the Lew speech, the remaining
question is whether Senate Majority Leader Harry Reid
(D-Nev.) will go with the Obama Administration or with
privacy champions.
Industry professionals and public officials have said
they want new rules to govern information sharing and
SEC’s Gallagher: Further Proxy
Guidance May Be Needed
Recent Securities and Exchange
Commission guidance on funds’ use
of proxy advisers may be insufficient
to address the conflicts that arise
from relying on such firms’ advice,
according to Commission Member
Daniel Gallagher
Daniel Gallagher. Further guidelines
from the SEC and the imposition of specific codes of
conduct may be necessary, he said.
A staff legal bulletin issued in June by the agency’s
Division of Investment Management and Division
of Corporate Finance was much needed, but “I am
concerned that the guidance does not go far enough,”
Gallagher said in a recent working paper for the
Washington Legal Foundation. “It has become clear
to me that, over the past decade, the investment adviser
industry has become far too entrenched in its reliance
on these firms, and there is therefore a risk that the
firms will not take full advantage of the new guidance to
reduce that reliance.”
The recent guidance spelled out that fund advisers
VOL. XXIII, NO. 9 / September 2014
cooperation between firms and government agencies
(FD, Juy).
The pending bill, the Cyber Information Sharing Act,
cleared the Senate Intelligence Committee in July. In
both the present and the previous congresses it passed
the House of Representatives. In the 112th, the White
House and privacy groups combined to kill it in the
Senate. By inaction, on the Senate floor the majority
leader can let the clock run out again this fall.
In his remarks, Lew urged Congress to pass a bill “to
encourage collaboration and provide important liability
protection.” Lew’s speech portrayed a dangerous situation,
with hackers scoring big gains by breaking into financial
institutions and threatening the national security. He
added that “far too many hedge funds, asset managers,
insurance providers, exchanges, financial market utilities
and banks should and could be doing more.” The bill
would allow, but not require, information sharing within
industries and between industry and government.
and their boards have a fiduciary duty to mitigate
conflicts of interest that proxy advisory firms might have,
and made clear that funds aren’t obligated to vote on
every proxy issue that arises (FD, August). Proxy firms
rose to prominence following 2003 SEC guidance that
suggested fund advisers could overcome their own
conflicts of interest with respect to proxy votes—for
instance, where the fund holds shares of a company
whose pension the adviser also manages—by getting
the opinion of an
independent third party. Proxy Advisers
Gallagher Recommendations
Since proxy
advisory firms also
s Commission-level guidance
to replace existing no-action
have other business,
letters
such as consulting
s Imposition of new rules, such
with companies on
as universal codes of conduct,
how to structure their
on proxy advisory firms
governance and voting,
use of the firms has led s A push for increased reporting
from companies to the SEC
to many of the same
regarding investment advisers
conflicts the 2003
and proxy advisers that make
guidance was intended
voting decisions based on
to address with respect
inaccurate information
to fund advisers,
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7
Fund Directions The monthly issue from Fund Director Intelligence Gallagher said, spelling out several recommendations
for addressing the issue.
Gallagher said Commission-level guidance, which
would replace the existing staff letters, could clarify
to investors that they need they need to assume
responsibility for their own voting decisions, and
can’t simply turn to “rote reliance” on proxy firm
recommendations. This “would go a long way toward
mitigating the concerns arising from the outsized and
potentially conflicted role of proxy advisory firms,” he said.
The SEC also should explore potential reforms
“including, but not limited to, requiring [proxy advisers]
to follow a universal code of conduct, ensuring that
their recommendations are designed to increase
shareholder value, increasing the transparency of
their methods, ensuring that conflicts of interest are
dealt with appropriately, and increasing their overall
accountability.”
Senators Urge Fed Transparency
On SIFIs
A group of nine senators has asked why the Federal
Reserve has yet to say how it means to oversee nonbank systemically important financial institutions before
any more firms are designated as such.
The group of senators, which includes Sen. Pat
Toomey (R-Pa.) and eight other Republicans, on July
30 penned a letter to Treasury Secretary Jack Lew.
Lew is ex-officio chairman of the Financial Stability
Oversight Council, which Congress in 2010 gave
discretion to label firms SIFIs, which are subject to Fed
supervision.
The mutual fund industry has been fighting SIFI
designation to avoid the central bank’s supervision,
but it is unclear how Fed regulation would affect firms.
“The Federal Reserve still has not formally elucidated
how it would regulate non-bank financial companies”
if they were tagged as SIFIs, the senators wrote. “This
undermines the validity of a SIFI designation, since the
FSOC can hardly fairly or accurately determine whether
such designation would be an appropriate remedy…
when it is not clear what such a designation would
actually do.”
Toomey and his fellow lawmakers said that if the Fed
does get involved as a regulator of asset managers,
it will be elbowing itself into a regulatory space
8 www.funddirectorintelligence.com
already occupied by the Securities and Exchange
Commission. Unless the SEC relinquishes control over
asset managers, the letter continued, SIFI designation
“could lead to the creation of two different, overlapping
and potentially conflicting federal regulatory regimes for
any such designees: one by the SEC and another in the
form of whatever (still undetermined) rules end up being
imposed by the Federal Reserve.”
Since Congress, FSOC and the Fed have not
specified what prudential supervision of non-bank
SIFIs would be like, it has been left to industry firms
and lawyers to speculate about what might be in store.
Gregory Rowland, partner at Davis Polk & Wardwell,
envisages the Fed might turn to very traditional bank
regulation, including capital, leverage limits and liquidity
requirements. “If bank-like regulations were imposed on
funds, it could severely alter the way money managers
have to manage funds and could reduce fund returns,”
he said. “For example, funds might be required to
holder a larger portion of their portfolio in more liquid,
less risky assets-thereby dragging down returns.”
An FSOC press aide did not respond to a request for
comment.
SEC’s Pay-To-Play Rule
Goes To Court
A federal court is being asked to strike down the
Securities and Exchange Commission’s pay-toplay rule. Pay-to-play makes it unlawful for any adviser
firm, including advisers of registered investment
companies, to provide adviser services to any
government official or candidate for office who might be
able to influence the awarding of adviser contracts for a
two-year period after a political contribution.
In a suit filed on Aug. 7 in D.C. District Court,
the New York and Tennessee state Republican Party
committees allege that in adopting a rule that hampers
the fundraising of candidates and political groups the
Commission acted capriciously, exceeded its statutory
authority, and violated the First Amendment. The two
plaintiffs also asked for a preliminary injunction against
enforcement of the rule. The case complaint points out that there are 11,000
registered investment advisers under the Investment
Adviser Act and all their covered associates also are
affected by the ban. Political contributions of up to
© Institutional Investor, LLC 2014
VOL. XXIII, NO. 9 / September 2014
Fund Directions The monthly issue from Fund Director Intelligence $2,600 are permitted under the pay-to-play rule of the
Federal Election Commission, but the SEC’s rule
cuts the number down to $300 in cases where the
donor may vote for the candidate and $150 where that
is not the case. “Decades of Supreme Court precedent
rejects treating all campaign contributions as ‘bribes,’
and all campaign contributors who work as investment
advisers as presumptively seeking favors from corrupt
officials,” the complaint argued.
The court has assigned the case to Judge Beryl
Howell. She is an Obama appointee best known to
fund lawyers for her decision rejecting a challenge to
www.funddirectorintelligence.com
the Commodity Futures Trading Commission by the
fund industry over CFTC’s rule requiring some advisers
to registered investment companies to register with the
CFTC as commodity pool operators (FD, January 2013).
“This is probably not the assignment that the plaintiffs
were hoping for,” said John Baker, partner at Stradley
Ronon Stevens & Young. The SEC recently has taken action to enforce its
pay-to-play rule by instituting a cease and desist order
against Pennsylvania venture capital firm TL Ventures.
A spokesman for the firm was not immediately available
for comment. An SEC press aide declined to comment. People & Funds
Ariel Funds Board Adds
Independent Director
The board of Ariel Investment Trust
has added independent director Kim
Lew, v.p. and co-CIO for Carnegie
Corporation of New York, ahead of
the retirement of lead independent
director Royce Flippin at the end of
Kim Lew
the year. Lew was selected because
of her investment management experience at the
Carnegie Corporation, where she is responsible for
the foundation’s $3.2 billion endowment, and the
Ford Foundation, where she worked for 13 years as
an equity analyst and portfolio strategist, according
to John Rogers, founder and chairman of Ariel
Investments and an interested member of the board.
The addition of Lew “will complement the diversity of
Ariel’s board,” interested Chairman Mellody Hobson,
president of Ariel Investments, said in a statement. “A
core belief at Ariel, following the wisdom of advanced
research, is that board diversity drives better decisionmaking.”
Lew, a graduate of the University of Pennsylvania’s
Wharton School and Harvard Graduate School
of Business, serves on the board of the Stevens
Cooperative School, the ACLU Investment Committee,
the Investment Committee of the Girl Scouts of
America, and on the executive board of the Private
Equity Women Investor Network.
The Ariel board oversees six funds with $9.2 billion in
assets and also includes independent trustees James
VOL. XXIII, NO. 9 / September 2014
Compton, William Dietrich, Christopher Kennedy,
William Lewis, Carl McCall and James Williams.
In addition to Rogers and Hobson, Merrillyn Kosier,
executive v.p. and chief marketing officer, serves as an
interested trustee.
Matthews Asia Funds Names
Bobroff’s Successor
The board of Matthews Asia Funds has named
Jonathan Zeschin independent chairman. He had
been acting chairman since the unexpected death of
Geoffrey Bobroff in July (FD, August).
Zeschin, 61, has served on the Matthews board
since 2007 and is a partner at wealth management and
advisory firm Essential Investment Partners.
“A succession plan was already being discussed by
the board before Geoff’s untimely passing,” a Matthews
spokeswoman told FD. Bobroff was 70 at the time of his
death. Zeschin has penned a letter to shareholders that
will be published in the Matthews Asia Funds’ upcoming
semi-annual report. In it, he said: “Always one to be
thinking far ahead, Geoff had already been working on
a transition plan in anticipation of retiring from the board
of trustees of the Matthews Asia Funds in several years’
time. With his passing, that transition plan has been
accelerated, and I will officially become board chairman
on August 27, 2014.”
The board also includes independent directors
Richard Lyons, Rhoda Rossman and Toshi Shibano,
as well as interested trustee Paul Matthews. It is unclear
if Bobroff’s empty seat on the board will be filled.
To sign up for email alerts and online access, call 800-437-9997 or 212-224-3570.
9
Fund Directions The monthly issue from Fund Director Intelligence MFS Fund Board Back
To 10 Directors
The board of MFS Mutual Funds has added one
interested and two independent directors in the past
several months, returning to a group of 10. In addition
to Robin Stelmach, v.p. and COO of adviser MFS
Investment Management, Steven Buller and
Maryanne Roepke have joined the board, which has
been comprised of eight directors since a spate of
retirements over the past few years (FD, November 2011).
Buller is a former CFO at BlackRock, where he
oversaw the tax department, internal audit and control
functions, and the global corporate and investment
company accounting policy. He previously worked at
Ernst & Young for more than 30 years, serving as
global director of asset management and as the audit
partner for various investment company complexes.
Is Popejoy
(Continued from page 1)
income “not appropriate” and maintaining that 200
schoolteachers could be hired for that amount. He called
on PIMCO’s German parent, Allianz, to investigate the
bond guru’s conduct. The comments—which included
referring to Gross’ reported management style as
“bullying”—followed a Feb. 24 article in The Wall Street
Journal that detailed tensions between Gross and
Mohamed El-Erian, co-chief investment officer and Gross’
heir apparent, in the months leading up to El-Erian’s
unexpected departure in January.
A July 31 Statement of Additional Information said
Popejoy “resigned his position as trustee of PIMCO
funds” but did not provide a reason. A supplement to
the SAI was filed Aug. 26, and the reference to Popejoy
was removed (though he is not listed as a trustee).
A PIMCO spokesman declined to comment, as did
representatives at Dechert, independent counsel to the
board. Popejoy referred questions to his lawyer, Ronald
Rus at Brown Rudnick. “We are in discussions with
counsel for the trustees and PIMCO to provide a more
accurate description of Mr. Popejoy’s relationship,”
Rudnick told FD. He declined to comment further.
Independent director Vern Curtis, 80, also has
resigned from the board after serving for 27 years. The
PIMCO Funds board has no mandatory retirement age;
rather, filings for the funds state: “Trustees serve until
10 www.funddirectorintelligence.com
He is chairman of the Financial Accounting
Standards Advisory Council and a member of the
Standing Advisory Group of the Public Company
Accounting Oversight Board. He has corporate
board experience.
Roepke is a former senior v.p. and CCO at
American Century Investments, where she worked
for more than 30 years. She has previous fund board
and academic board experience and is a former
member of the Investment Company Institute’s Chief
Compliance Officer Committee and Risk Management
Advisory Committee.
The MFS Mutual Funds board, which oversees
142 funds, also includes interested director Robert
Manning, chairman and CEO of MFS, and independent
directors David Gunning (chairman), Robert Butler,
Maureen Goldfarb, William Gutow, Michael Hegarty,
John Kavanaugh, Laurie Thomsen, and Robert Uek.
their successors are duly elected and qualified.” It is
unclear when—or if—the two will be replaced.
Popejoy, a former president of mortgage giant
Freddie Mac, took six months off from the PIMCO
Funds board in 1995 when he was hired as an
emergency chief executive for then-bankrupt Orange
County, Calif. In 1997, he was named director of
California’s lottery; he remained in that position for about
18 months before returning to the private sector.
The PIMCO Funds board is chaired by Brent Harris,
a managing director at the adviser and president of the
funds, and also includes interested director Douglas
Hodge. The remaining independent directors are: Philip
Cannon, 74; Michael Hagan, 75; and Ronald Parker, 63.
Fund Director Intelligence
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© Institutional Investor, LLC 2014
VOL. XXIII, NO. 9 / September 2014
Institutional Investor’s Fund Industry Intelligence &
Fund Director Intelligence Present the
22nd Annual
Thursday, March 26, 2015 • Mandarin Oriental, New York City
Call for Nominations!
For the past 22 years, the highly coveted Mutual Fund Industry Awards have recognized
the people and organizations that stood out for their excellence, achievements and
contributions to the mutual fund industry.
The editors of Fund Industry Intelligence and Fund Director Intelligence invite you
to contribute to this year’s awards by nominating people and/or firms deserving of
recognition for their accomplishments in 2014.
SUBMIT YOUR NOMINATION AT: www.funddirectorintelligence.com/nominate
Deadline for nominations: Friday, November 14th
2015 Award Categories
• Fund Industry Intelligence’s Lifetime Achievement Award
• Fund Director Intelligence’s Lifetime Achievement Award
• Fund Leader of the Year
• Fund Marketer of the Year
• Sales Success of the Year
• Deal of the Year
• Ad Campaign of the Year
• Retirement Leader of the Year
Nominees and Honorees will be
announced on the following dates:
Friday, November 21st, 2014
Hall of Fame Inductees
Friday, January 23rd, 2015
Lifetime Achievement Award Recipients
Friday, January 30th, 2015
Rising Stars of Mutual Funds & Nominees
• Trustee of the Year
• Small Board Trustee of the Year
• Independent Counsel of the Year
• Rising Stars of Mutual Funds
On Thursday, March 26th, nominees will be honored and winners will be announced and
awarded at the dinner and awards ceremony at the Mandarin Oriental in New York City.
Questions?
Fund Industry Intelligence Nominations: Mike Schnitzel, [email protected], (212) 224-3258
Fund Director Intelligence Nominations: Hillary Jackson, [email protected], (212) 224-3964
Awards Dinner and Ceremony: Pat Bertucci, [email protected], (212) 224-3890
Rising Stars: [email protected]
Fund Directions The monthly issue from Fund Director Intelligence www.funddirectorintelligence.com
Learning Curve
Technology, Compliance and the Future of Fund Governance
By Mitchel Kraskin, Compliance Science, and Todd Spillane, Invesco
Not all that long ago, a chief compliance officer or
an independent fund director could feel confident
that managing fund governance risk and compliance
(“GRC”) exposure was a straightforward matter of
understanding regulations, by-laws, best practices,
and supervisory procedures. This is no longer true.
In the past decade the GRC model has become
intertwined with complex layers of technology. Some
new technologies such as social media necessitate
additional GRC oversight, while other technologies
provide the tools to actually run a tighter ship (i.e., allow
you to monitor social media posts).
The good news is that most investment management
firms now have the basic blocking and tackling
technology tools and related tech policies in place
to manage their GRC functions. The basics include
archiving email/social media, employee personal
trading surveillance, and trade order management
systems. Beyond the basics, it often depends on the
size of the fund complex to determine which other
technologies are needed to fully support the GRC
function.
The ongoing challenge for boards is twofold:
• Ensure compliance professionals are constantly
thinking about ways they can better leverage
technology to manage the GRC function in the
ever-evolving world of investment management;
• Ensure the board itself is up to date on how the
GRC model is morphing and how the company
needs to support the changes.
Many investment management firms have spent
millions of dollars on technology to assist the fund
managers in making the best possible investment
management decisions. This has not always been the
case, nor has it always been balanced with a rightsized GRC spend. This gap, if it emerges, is a red flag
and an important topic for fund boards to consider.
We will endeavor to highlight for directors additional
considerations below; however, we would first like to
frame the conversation based on existing regulation and
tech trends landing on the desk of every fund’s CCO.
12 Rapid, Dramatic Change
Mitchel Kraskin
The key to success in managing GRC
within the investment management
business is to not only understand
the rules of the game but also to
understand in great depth how the
business works. A baseline assumption
should be that the rules are
constantly changing across multiple
Todd Spillane
regulators—including the Securities
and Exchange Commission, Commodity Futures
Trading Commission, and, for those that sell products
overseas, a myriad of other regulators. Additionally, the
expectations of business partners and clients are never
ending, and firms need to continue to evolve in order to
be successful. The GRC function is not exempt from the
rapid changes in the operating environment. As a result,
the board, compliance, and other support functions
need to collaborate; that collaboration should include all
stakeholders, especially technology.
So what impact does technology have in terms
of compliance? A CCO is responsible under Rule
38a-1 for the oversight of all policies and procedures
within a fund complex. With the evolution of the use of
technology throughout business, and with dramatically
higher expectations by the SEC and other regulators,
everything can be a compliance problem these days.
So what areas has the SEC had compliance concerns
about recently?
The SEC currently is focused on cybersecurity to
ensure that firms have concentrated their attention
on the critical nature of the personal information that
firms possess and are obligated to protect. But this is
not the only area that regulators are focused on in the
electronic world; CCOs need to look to their business
partners regarding technology to make sure they have
the appropriate controls around change management
of applications and the use of models. Also included
as part of this change is social media, and compliance
must work with business areas to ensure that
appropriate controls are in place to meet the current
© Institutional Investor, LLC 2014
VOL. XXIII, NO. 9 / September 2014
Fund Directions The monthly issue from Fund Director Intelligence regulatory requirements.
Directors should be aware of the regulatory tech “hot
buttons” and require periodic updates from compliance
and IT professionals as to the status of them within the
organization. Recent topics include:
•B
ring Your Own Device (BYOD)
•W
ebsites and blogs
•B
usiness continuity
•T
rade allocation methodology in order management
systems
•E
lectronic record retention
•P
ersonal trading oversight
•B
ig data
Note that compliance professionals live in the land of
gray, and clients—including fund boards—are looking
for key thought leadership on these issues.
Technology Support
Very few of the items listed above were what was
traditionally viewed as the responsibility of the
compliance department, but since the enactment
of Rule 38a-1, the SEC staff views any breach of
regulations or best practice for any of these items as
a breach of the compliance rule. As a result, the SEC
staff is pushing compliance in a very different direction.
The SEC also is looking at the management of the
overall compliance program, and generally—other than
perhaps a knowledge-based application for control
over policies and procedures—most compliance
departments are just using the basic Microsoft tools. In
the future, is this going to be sufficient for compliance
professionals to be successful? Probably not. Directors
need to understand if the technology support is
scaled to the risk faced by the company. In many
organizations, it is not or has fallen behind.
We are seeing the emergence of better analytic tools
specifically designed for compliance professionals so
they can more efficiently oversee and monitor all of the
activities of the firm in real time. The days of looking at
reports that are 30 to 60 days in the rearview mirror are
coming to an end, and the SEC’s expectations will be
that compliance departments will have analytic tools
that operate in real time to better prevent and detect
violations of federal securities laws. So what types of
analytics are possible that compliance professionals,
and ultimately board trustees, should be aware of to
bring the compliance program to the next level?
VOL. XXIII, NO. 9 / September 2014
www.funddirectorintelligence.com
• Volatility testing/stress testing
• Transaction cost analysis
• Risk limits on underlying and counterparties
• Credit monitoring in real time rules-based systems
• Netting exposure versus absolute value exposure in
real time
• Intraday reportable positions monitoring
• Global position holdings limitations for various
derivatives contract limits on each exchange
• Segregation of assets for derivative transactions
• A systematic review of email, voice communications
correlated with trading activity (both personal and
fund trading)
Getting There From Here
Fund boards have an oversight role and, as a result, it
is important that board members understand and are
comfortable with the strategy that the firm determines
as it relates to the use of technology in the firm and
particularly as it relates to managing the overall
governance, risk and compliance program. Fund
sponsors should periodically present to the trustees
the overall strategy, with implementation updates on
significant GRC initiatives, including the technology
solutions used to implement the strategy.
It also is important that board members understand
the multifaceted aspects of the business and how the
management company will get to the next level. The first
perspective to understand is how fast the respective
business is moving, and to understand the strategy
for making the GRC and the oversight function more
sophisticated. This must be driven by the CCO with
the support of management and the board. There is
no need to describe the numerous compliance failures
in the industry; they are all well- documented in terms
of the overall costs to the organization (fines and other
expenses). However, this generally does not include the
cost of the time lost dealing with these issues, which
certainly can be very significant, or the reputational
damage incurred. When doing a cost benefit analysis,
it is a simple equation to invest in the GRC tools now
instead of doing it on a regulator’s timetable and in the
harsh glare of the media and clients.
So, what is the problem? The most significant
problem is that many CCOs do not have the expertise
or the time to stay up to date on the latest technologies.
This is where compliance and technology can better
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13
Fund Directions The monthly issue from Fund Director Intelligence partner together to bring a technologist into the
compliance group to monitor the technology landscape
for new and innovative products, as well as serve in a
project management liaison role with technology.
The Role of the Board
Given the velocity of change in the tech world, directors
should be sure to identify the key tech stakeholders and
encourage the development of an accountability matrix.
This matrix should include:
• who initiates new tech,
• who measures the risk of existing tech,
• who determines the regulatory “view,” and
• who supervises the ongoing risk.
Board members should request that the management
company, as part of the 15(c) contract renewal process,
prepare presentations from subject matter experts from
the technology department to probe the strategy in the
different areas of technology.
Trustees in the new regulatory world need to
be aware of the overall risks to the business. The
technology department is not exempt from those risks
and perhaps contains the most risk in large firms, so it
www.funddirectorintelligence.com
would not be inappropriate for the trustees to expect to
review the overall risk matrix specifically with respect to
technology. Rather, the directors should understand and
probe the specific risks that the firm and the technology
department face, as well as any gaps and the mitigation
strategies.
Compliance departments historically have added
more human resources, and while having the proper
staffing level may solve an immediate problem, it
probably does not reduce the overall risk profile of the
organization. The only way to effectively reduce the
risk profile of investment management firms is to better
leverage innovative technology solutions. Compliance
professionals know the rules, and they know the
business; it is incumbent on CCOs to demand that their
technology departments help them see the vision of
what is possible to best manage risk and compliance of
each firm.
Mitchel Kraskin is co-founder and CEO of
Compliance Science, which provides governance, risk
management and compliance solutions. Todd Spillane
is CCO of Invesco.
News Briefs
The monthly news briefs are a summary of publicly reported mutual fund news. The information has been
obtained from sources believed to be reliable, but FD does not guarantee its completeness or accuracy.
Regulatory
• The use of Securities and Exchange Commission
administrative proceedings to resolve complex
securities law cases has been challenged by
defendants in two actions. They are seeking to require
the agency to file charges in federal court, where the
parties would have the full range of discovery rights.
In addition, any determination of a violation would be
made by an independent judge and jury rather than an
administrative judge employed by the Commission. (The
New York Times, 8/25)
• Firms are failing to include risk warnings in financial
promotions sent to millions of customers on social
media platforms, according to the U.K. Financial
Conduct Authority, which has proposed rules to
clamp down on the practice. The FCA has launched
a public consultation on its approach to supervising
financial promotions on social media, which it said was
14 in response to calls for guidance from the industry.
(Reuters, 8/6)
• Sen. Charles Grassley (R-Iowa) has launched an
inquiry into the amount of money the Commodity
Futures Trading Commission spends on office
leases, expressing concern that the agency is wasting
taxpayer money on underutilized space. In a July 31
letter to the Commission, Sen. Grassley requested
records detailing how much the agency has spent and
whether it has taken steps to reduce the amount of
unused space it leases. (Reuters, 8/1)
People
• Former Commodity Futures Trading Commission
Member Bart Chilton, an outspoken critic of some
high-frequency trading practices while at the agency,
has been enlisted in an effort to improve the image of an
industry facing regulatory and legislative scrutiny. The
© Institutional Investor, LLC 2014
VOL. XXIII, NO. 9 / September 2014
Fund Directions The monthly issue from Fund Director Intelligence Modern Markets Initiative, organized by four firms last
year, has hired former Bank of America and Nasdaq
OMX Group executive Bill Harts to lead its efforts, the
group said. (Bloomberg, 8/21)
• Tyler and Cameron Winklevoss have hired the
so-called Spiderwoman, Kathleen Moriarty, in their
fight to win regulatory approval for a bitcoin exchangetraded fund. Moriarty earned her nickname for her work
on State Street Corp.’s “Spider,” the first ETF when it
came to market in 1993, and has worked on a number
of innovative and unusual funds across her career.
(Bloomberg, 8/15)
• OppenheimerFunds’ appointment of Arthur
Steinmetz as chief executive is the first time an
investment manager has been tapped to lead
the firm. Steinmetz took over the CEO job July 1.
(InvestmentNews, 8/10)
Funds & Firms
• Vanguard Group has overtaken PIMCO as the
largest provider of taxable bond funds by assets.
Vanguard manages nearly $430 billion in the asset
class, compared with $425 billion for PIMCO, according
to • Morningstar. (InvestmentNews, 8/18)
Hedge fund manager John Paulson, the largest
investor in the SPDR Gold Trust, kept his stake in
the fund as gold prices rose on increasing demand.
Paulson & Co. held 10.23 million shares for the three
months ended June 30. (Bloomberg, 8/15)
• BlackRock’s iShares and PIMCO are closing a
combined 22 exchange-traded funds. PIMCO said it
was closing three index funds and its Build America
Bond Fund, while iShares said it would close 18 of its
funds, including its entire lineup of index-based targetdate funds. (InvestmentNews, 8/15)
www.funddirectorintelligence.com
for sometime this year” for the initial public offering,
CEO Julian Roberts said. (Bloomberg, 8/7)
• DoubleLine Capital’s Total Return Bond Fund took
in assets and had the best 12-month yield of its peers
as manager Jeffrey Gundlach bet interest rates would
fall rather than rise. Of 22 mortgage-backed securities
focused mutual funds with at least $100 million in
assets, only eight had net deposits for the first half of
the year, according to Morningstar. (Bloomberg, 8/6)
• PIMCO’s flagship Total Return Fund saw $830 million
of withdrawals in July, the slowest pace of withdrawals
since May 2013. The fund had total assets of $233
billion, according to Morningstar. (Bloomberg, 8/4)
Industry
• Marketfield Asset Management CEO Michael
Shaoul said he thought Chinese stocks were still in the
early stages of a rally. Shaoul said President Xi Jinping
is trying to avoid a slowdown in output as he seeks to
increase the contribution from services to growth while
reducing reliance on the credit-driven construction.
(Bloomberg, 8/25)
• The Wall Street Journal on Aug. 25 presented a
list of companies it said keep giving top corporate
officers huge pay packages and luxury perks despite
shareholder ire. Investors have repeatedly voted
against the salary and bonuses of these companies
at annual meetings, but the companies seem to have
dug in their heels-often because they have founders
who still run the business. Say-on-pay votes are
required under the Dodd-Frank Act, though the votes
are not binding. Scores of companies have overhauled
pay packages following failed votes. (The Wall Street
Journal, 8/25)
• PIMCO’s request to use derivatives in its Total
Return Exchange-Traded Fund was approved by the
Securities and Exchange Commission. The SEC
had frozen approval for the use of derivatives by new
ETFs in 2010 but later lifted the ban, provided funds
met certain requirements on risk management and
disclosure. (Bloomberg, 8/11)
• Samsung Asset Management, Korea’s biggest
fund manager, said the Bank of Korea could cut its
benchmark interest rate to 2%, probably in October
or November. “The government has been talking a lot
about weak economic sentiment, and an additional
cut can send a signal that policy makers are using all
means to boost growth,” CIO for fixed income Lee Do
Yoon said. (Bloomberg, 8/24)
• Old Mutual said it still plans to sell stock in its U.S.
asset management arm sometime this year, after
second-quarter inflows rebounded. “We’re still on track
• Mutual funds took in $30 billion for the month of July,
according to Strategic Insight. Equity funds took in
$18.2 billion. (PlanAdviser, 8/18)
VOL. XXIII, NO. 9 / September 2014
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15
Fund Directions The monthly issue from Fund Director Intelligence www.funddirectorintelligence.com
Calendar Sept. 9: Mutual Fund Directors Forum Director
Discussion Series—Open Forum, Minneapolis (202507-4488)
Sept. 11-12: NICSA General Membership Meeting,
Boston (508-485-1500)
Sept. 18: MFDF Director Discussion Series—Open
Forum, Greenwich, Conn. (202-507-4488)
Sept. 28-Oct. 1: Investment Company Institute Tax
and Accounting Conference, Phoenix (202-326-5800)
Sept. 29-30: ETF Trends ETF Boot Camp, New York
(http://etfbootcamp.net/ )
Sept. 30: MFDF Director Discussion Series—Open
Forum, Washington, D.C. (202-507-4488)
Oct. 7: Conference of Fund Leaders Roundtable,
New York (202-507-4488)
Oct. 14: MFDF Director Discussion Series—Open
Forum, San Francisco (202-507-4488)
Oct. 8: MFDF and Strategic Insight one-day
event “The Evolving Distribution Landscape –
Considerations for Fund Directors,” New York (202507-4488)
Oct. 16: ICI Capital Markets Conference, New York
(202-326-5800)
Nov. 3-5: Independent Directors Council Fund
Directors Conference, Chicago (202-326-5800)
Nov. 4: ICI Closed-End Fund Conference, New York
(202-326-5800)
Nov. 7: Advancing Fund Governance, D’Artagnan
Capital Fund, Ultimus Fund Solutions interactive
workshop “So You’re Thinking of Starting a Mutual
Fund,” Cincinnati (513) 939-2652
Nov. 13: MFDF Webinar Series on “CCO
Compensation: The MPI Annual Survey 2014” (202507-4488)
Dec. 9: ICI Global Trading and Market Structure
Conference, London (202-326-5800)
Dec. 10: ICI Securities Law Developments
Conference, Washington, D.C. (202-326-5800)
Dec. 11: ICI Cybersecurity Forum, Washington, D.C.
(202-326-5800)
16 Jan. 20-22, 2015: MFDF 2015 Directors’ Institute,
Palm Beach, Fla. (202-507-4488)
March 15-18, 2015: ICI Mutual Funds and Investment
Management Conference (202-326-5800)
April 9-10, 2015: MFDF 2015 Policy Conference,
Washington, D.C. (202-507-4488)
May 6-8, 2015: ICI General Membership Meeting,
Washington, D.C. (202-326-5800)
May 7, 2015: IDC Fund Directors Workshop,
Washington, D.C. (202-326-5800)
Quote Of The Month “The fact that we hadn’t done a formal review, yet we
have ESG funds, seemed a bit inconsistent.”—James
Woodward, independent director for The Boston Trust
& Walden Funds, discussing the impetus behind his
board’s recent governance review (see story, page 1).
One Year Ago In Fund Directions The board of Advisors Investment Trust was
finalizing plans to launch seven new funds and begin
work on others it had in the pipeline. The series trust
had launched just two years before with two funds.
[The AIT board actually brought eight new funds to
market in 2013 and saw assets under management
grow from about $290 million to more than $2 billion
during the calendar year. Moreover, the board took
oversight responsibility for JO Hambro Capital
Management funds that were reorganized into AIT
(FD, February).]
Five Years Ago Boards were beginning to look at the challenges
of managing money market funds and some were
evaluating whether to exit the business. [New money
market fund rules finally were approved by the
Securities and Exchange Commission in July after
years of debate (FD, August). In the meantime, Victory
Funds was among those to exit the money market fund
business (FD, July 2012).]
© Institutional Investor, LLC 2014
VOL. XXIII, NO. 9 / September 2014