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Millstein Center and the Mutual Fund Directors Forum Found Network of Independent Mutual Fund Leaders

By Harvard Law School Program on Corporate Governance

On May 5, 2008, The Millstein Center for Corporate Governance and Performance at the Yale School of Management and the Mutual Fund Directors Forum partnered with independent leaders of mutual fund boards of trustees to found the Conference of Fund Leaders (CFL), a permanent new body composed of independent board chairs and lead independent directors of mutual funds in the United States. The CFL will provide a unique opportunity for the independent leaders of fund boards to come together with their peers to discuss governance issues that board leaders and their funds face; proactively present their views on policy matters important to fund investors and independent directors, regulators and lawmakers; and promote research into the value and impact of effective, independent leadership at mutual funds.

Mutual funds account for about one-third of equity ownership in North America and hold over $10 trillion in assets on behalf of American investors and savers. Fund boards negotiate the contracts that establish the price fund investors pay to have their assets managed, oversee critical aspects of their funds? operations and work to protect fund investors from any conflicts of interest that may arise in the management of funds. The success of fund boards is thus crucial to fund shareholders? ultimate success and their work is increasingly drawing public scrutiny. The CFL, which plans to convene two meetings a year, intends to serve as a unique peer network for sharing ideas and prompting independent collective action where appropriate.

The members of the CFL’s Steering Committee are: John Hill, independent chair of the Putnam Funds and founding chair of the CFL; Peter Clapman, independent chair of the AARP funds and vice-chair of the CFL; Ira Millstein, senior associate dean for corporate governance at the Yale School of Management; David Ruder, chairman of the Mutual Fund Directors Forum Board; Dwight Crane, independent lead director for Legg Mason Partners Equity Funds; William Foulk, independent chair of AllianceBernstein funds; Virginia Stringer, independent chair of First American Funds; and Roger Vincent, independent chair of ING Mutual Funds.

The CFL will be jointly administered by the Millstein Center for Corporate Governance and Performance at the Yale School of Management, which originated the project, and the Mutual Fund Directors Forum, the independent professional body representing U.S. independent fund directors.

The launch event is scheduled for late October in New York City. The agenda will focus on shareholder rights, board leadership and other current topics.

The founding of the CFL comes against the backdrop of recently adopted regulations by the U.S. Securities and Exchange Commission requiring mutual fund boards to be chaired by an independent. Until this SEC initiative, few such boards featured leadership separate from that of the fund family. The regulation itself remains in limbo after court rejection. The SEC has promised to restore it. Meanwhile, an estimated 65% of U.S. mutual funds have already acted to install independent chairs in anticipation of the rule becoming formalized. Most other funds have named independent lead directors.

Contact:
John Hill, chairman of the Conference of Fund Leaders and chairman of the Putnam Funds,
+1 203 625 2503, JohnHill@firstreserve.com

Stephen Davis, project director, Millstein Center for Corporate Governance and Performance,
+1 203 432 9689, Stephen.m.davis@yale.edu

Susan Wyderko, executive director, Mutual Fund Director Forum,
+1 202 521 6754, susan.wyderko@mfdf.com.

Full post as published by The Harvard Law School Corporate Governance Blog on May 12, 2008 (boomark / email).