The Securities and Exchange Commission is reassessing the role of the behind-the-scenes mutual fund players known as independent directors.

These directors, who serve on mutual fund boards alongside officers of an investment company and its affiliates, are expected to function as advocates for investors. But their effectiveness has been questioned in recent years, partly in lawsuits brought by investors.

The rapid growth of the mutual fund industry is reason enough to examine how independent directors can protect the interests of investors, SEC Chairman Arthur Levitt said Tuesday as he kicked off a two-day roundtable on the role of independent directors. He noted that 66 million Americans own fund shares and that industry assets spiked to $5.5 trillion in 1998.

"We owe it to those 66 million people to ensure those funds are being run in their best interest," Mr. Levitt told the roughly 200 people who attended the forum. "We want to know what works, and more importantly we want to know what doesn't work."

The SEC asks a lot of directors, and "we may ask more of directors in the future," Paul F. Roye, director of the SEC's division of investment management, said in remarks that followed Mr. Levitt's.

Topics of the two-day forum include mutual fund fees and distribution agreements, soft-dollar arrangements, disclosure requirements, and special issues relating to bank-run funds.

Mutual funds, which are organized similar to corporations, have a board of directors to oversee issues such as portfolio management, fees, and performance. But unlike other companies, at least 40% of a fund's board must be directors who are not affiliated with the fund, its investment adviser, or its principal underwriter.

One of the first issues for discussion was the role of independent directors in regulating mutual fund fees.

SEC chief economist Erik R. Sirri, who moderated a panel discussion, wondered whether independent directors had a special responsibility to ensure that investors understand mutual fund costs.

"Or can you rest comfortably knowing you have complete and accurate disclosure and therefore you're off the hook?" he asked.

Some panelists said they felt that independent directors had an added responsibility to drive down fees, but Robert C. Pozen, president and chief executive of Fidelity Management and Research Co. of Boston, suggested that investors are more interested in performance.

Meanwhile, John D. Markese, president of the American Association of Individual Investors, said shareholders feel disconnected from independent directors. He suggested they be nominated directly by shareholders, instead of by the fund company or other directors.

Some panelists disagreed, but Mr. Sirri, the moderator, said it was not "fantasy" to think that the SEC could find a way to give shareholders increased input.

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