The SEC, it seems, is serious when they say that mutual fund trustees are “watchdogs” and “gatekeepers,” and they are prepared to hold board members responsible for acting that way. For the second time in less than six months, the SEC named fund board members in an enforcement action. This time, the focus is on disclosure and good governance.
Several things are crystal clear:
- “No boilerplate” disclosure means, well, no boilerplate disclosure;
- The SEC has told the fund industry – and Congress – that they are looking at fund fees, and it appears that they don’t like everything they see;
- The regulator has a view on what good corporate governance should look like and they are willing to take a stand on it; and
- Funds should comply with their own written procedures.
One other thing: the SEC found that the CCO “caused” the funds to violate the compliance polices adopted by the funds. Did the target on their backs just get bigger?