SEC Approves Rules to Boost Independence of Fund Directors

The Securities and Exchange Commission adopted a set of initiatives that will increase the number of mutual fund firms' independent directors and require improved disclosure about fund directors to shareholders.

The changes, which were expected, will require independent directors to constitute at least a majority of a mutual fund's board of directors instead of the 40% currently required by the Investment Company Act. The rules also require independent directors to select and nominate other independent directors, and that any legal counsel for those directors be independent as well.

As part of the new rules, fund companies must provide better information about directors to their shareholders including more details about their experience, the number of fund shares they own, potential conflicts of interest and information about the board's governing role in the fund. ...