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Rating:Odd Lots, October 14, 1999 Not Rated 3.0 Email Routing List Email & Route  Print Print
Thursday, October 14, 1999

Odd Lots, October 14, 1999

Reported by Sean Hanna, Editor in Chief

Levitt again pushes for independent directors
From The Wall Street Journal -- password needed
Arthur Levitt is pushing hard to increase the number and influence of independent directors on fund boards. Yesterday, the SEC Chairman formally announced the creation of the Mutual Fund Directors Education Council. Levitt also said that the SEC has opened a public comment period on rules governing the issue that lasts until Jan. 28, 2000. Levitt first outlined possible rules last Spring. Possible new mandates include: that independent directors constitute at least the majority of a fund's board; that new independent directors be selected and nominated by incumbent independent directors; that legal counsel not have been affiliated with the investment adviser for at least two years; that independent directors be protected from the cost of legal disputes with fund management. The paper also reports that tools to assist directors such as "requiring basic information each year in annual fund reports about directors' identities and experience; disclosing directors' ownership of shares in the fund family, and disseminating information about conflicts of interest that may exist between the directors and fund shareholders," be created. Are green brokers why American Funds may get new classes
From The Los Angeles Times
Capital Research & Management may be ready to move beyond the traditional front-end load for its American Funds, according to its hometown paper. The fund group has been an old-fashioned holdout offering only one flavor of shares even as rivals rolled out "B", "C" and other fund structures. Recently the fund company sent proxies to the shareholders of seven of its funds which would allow multiple share classes. "The filing of proxies shouldn't be taken as a decision," a spokesperson for the management company is quoted as saying. "We will have that ability, but no decision has been made." However, the paper speculates that "less-seasoned" brokers are facing resistance from investors' reluctant to pay a front-end charge.

Is there a reason for the Internet Fund split?
From The Los Angeles Times
Perhaps there is a somewhat rational reason for Monument to split the shares of the Internet Fund after all. Alexander Cheung, manager of the fund, told the LA Times that Monument is about to offer Class B shares which will be priced at about $10. One goal of the split is to make the NAV on the Class A shares "in line" with the new shares. From a public relations point of view Monument may have been better off not hiding this fact. The Times' article ridicules the split with quotable gems including:
    "Obviously, they're trying to capitalize on the fact that a lot of people are used to buying Internet stocks when they split," said Russel Kinnel, equity editor for Chicago fund tracker Morningstar Inc. "They hope the same suckers do the same with their fund."
    "Why you'd want morons in your fund who are scared away by high NAV prices, though, I don't know," said Morningstar's Kinnel.

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