From the Editor...

August 1, 2022

By Hillary Jackson

From the Editor...


The mutual fund industry spent years fighting accusations from the plaintiffs' bar they they charged excessive fees. More than two dozen lawsuits were filed, and the last one was finally settled about a year ago. The plaintiffs' bar was never successful in convincing the courts of its arguments, which took a variety of approaches, but board processes developed for the better nonetheless over those years. This year, the new director of the Division of Investment Management, William Birdthistle, seems to be rekindling the argument that fees are too high and Section 36(b) of the '40 Act may be being violated. 


Birdthistle first raised the issue in March, during a video speech to the ICI's 2022 Investment Management Conference when he pointed out that the SEC has the ability to bring action under 36(b) and questioned "whether the duty enacted in the statute is truly being honored." He echoed the sentiment last week at a PLI event, when during a pre-recorded video speech he reiterated that the SEC's remit includes ensuring that advisers comply with their fiduciary obligations


As it turns out, the Enforcement Division has begun issuing document request letters to fund advisers regarding their 15(c) processes and fees. So...where does this all end? The SEC won't say, the market is in wait-and-see mode. We'll stay on the story and bring you the news as we gather it. 


We recently spoke exclusively with Susan Sweeney, who took over as independent chair of MassMutual Funds at the start of this year. The board has been actively succession planning and recruiting and welcomed three new independent directors into the boardroom this summer. As a result, when the board meets in person for the first time since 2019 next month, the group will be larger and more diverse. This latest A Seat at the Table feature is an interesting one!


In other news, we've run a 10 Things... list on board configuration, reported on changes in the Frontier Funds boardroom, highlighted an op-ed piece in favor of board term limits written by a well known board chair, and more.  


Enjoy the last month of summer!


For now,


Hillary Jackson, founding editor



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