The battle between the money-market industry and the SEC isn't letting up. Independent lobby groups continue to publicly disagree with the SEC's proposals, most recently saying that the suggested reforms are assigning fund boards too much responsibilities.

"We support the goal of the SEC's amendments, which is to reduce risk, but we don't want that to put us in the position of making decisions that should be for management," Michael Scofield, chairman of the governing council of the Independent Directors Council, an ICI affiliate, commented in a Wall Street Journal article.

The new regulations could require that money-market funds' boards must designate three or more contracted ratings firms in order to determine if securities are eligible for purchase. The SEC also wants boards to make annual determinations on the reliability of the agencies' ratings.

Northern Trust Investments sent a letter to the SEC, arguing that most board members of money-market funds "don't know how ratings agencies make their credit-rating determinations and don't have sufficient information to make sure they're reliable."

David Smith Jr., executive vice president and general counsel at the Mutual Fund Directors Forum, reiterated this point, saying "while an effective board needs to fully understand the operations of a fund, the system is not supposed to have the board perform those duties directly."

Recently, money-market firms such as Fidelity and Vanguard have been particularly vocal in their disagreement with the SEC's proposed regulations, especially related to floating NAVs. 

Edited by: Daniel Tovrov


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