From the Editor...
Independent mutual fund directors continue to earn more each year, but the annual increases are getting steadily smaller—dropping from an increase of 7.5% in 2014 to just 4.2% last year, on average. Management Practice Inc. will release its annual director compensation survey results this week, but we got a preview of the figures on Friday and the downward trend has certainly continued. Other statistics presented by MPI in the survey report held steady, for the most part, including the percentage of independent directors on boards, the number of female directors, how directors are paid, and when directors are retiring. FBV is the only place you'll find details on the MPI report ahead of its official release.
In the legal realm, Western Asset Management Co. was sued under Section 36(b) of the Investment Company Act of 1940 at the end of April. The lawsuit, filed by Howard Winston, followed a demand on the board and a books and records request by the same plaintiff. Winston claims that the fees charged to shareholders of two WAMCO closed-end funds are excessive and that the funds' discounts to net asset value are too big. For its part, WAMCO maintains the 36(b) case is "without merit." This is definitely one we'll be watching, though it's far from all that's going on in fund litigation.
ICI Mutual recently published its annual Claims Trends report, in which it provides an overview of the litigation and regulatory enforcement landscape in the fund industry. In it, the authors suggest that the current environment is a "new normal" for the fund industry, which will need to continue being cognizant of vulnerabilities to lawsuits and regulatory actions.
Speaking of regulation, the Securities and Exchange Commission announced earlier in May that Diane Blizzard would be leaving the Division of Investment Management. Blizzard has put in decades of service at the SEC and is just the latest long-term senior-level DIM staffer to depart (she'll be gone at the end of this month). Douglas Scheidt announced just two weeks earlier that he'd also be leaving DIM, though he'll stay on through September.
In our Added Perspective section, where we post previously published work that we believe may be of interest to our subscribers, check out the Center for Audit Quality's latest cybersecurity risk management tool. It's written for corporate boards, but there is a lot of useful information in there for fund boards as well.
Hillary Jackson, founding editor