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Rating:Directors Get a Watch Dog Not Rated 3.0 Email Routing List Email & Route  Print Print
Thursday, July 05, 2001

Directors Get a Watch Dog

Reported by Sean Hanna, Editor in Chief

Directors of fund companies are about to get more educated, or so hope George Martinez and Michael Lipper. The pair is the lead force behind FundWatchDog.com, a web site targeted at educating and providing board books to directors. Martinez, an industry executive most recently with State Street, is the firm's founder, chief executive officer and president. Lipper, who sold his fund data firm to Reuters, put up the cash for the concept earlier this year.

Getting funding from Lipper means that the firm will not face the same problems that have plagued much of the dotcom business community, said Martinez. "We have taken no outside money to put the concept or the original site in place and don't have outside investors," he said. "We have a great partner in Michael Lipper. He has enthusiasm for the business and the resources to back it."

The site is special in that it was put together with input from the industry, explained Martinez to the MutualFundWire.com. "This is not two guys in a garage who came up with a dead-on concept," he explained, adding that the project has input from all Big Five public accounting firms and 11 leading fund law firms.

The site also boasts a number of fund firms on its advisory board, including: Alliance Funds, State Street Bank & Trust, Victory Capital, Neuberger Berman, U.S. Global Investors, J&W Seligman, John Hancock, INVESCO, ABN AMRO, Van Kampen and SunAmerica Asset Management.

To date no fund firm has signed on as a paying client, but Martinez expects that to change by next Fall. "We are going to board meetings in August and September," he explained. "We have had a lot of interest in the product and are on the road a lot now."

Firms that join the service will receive what is essentially a board education service. Martinez formulated the concept at the end of 1999 in response to the ICI's Best Practices report and his own experience preparing board books at a number of firms, including State Street, Bisys, and Alliance.

The site will also provide news, information and an educational center to directors through a "semi-private labeled" site. When a director logs on he or she will be taken to a site dedicated to the fund group. That part of the site will include an eBoard Room, prospectus for the funds, their code of ethics, fund performance and the D&O insurance policy.

FundWatchDog will also provide directors with laptop computers and training to go online if they need it. "The average director is 60 to 63 year old. We are trying to get them over hurdle by providing computers and training," explained Martinez.

Fund companies joining the service will be charged a one-time a per member initiation fee. The site will also levy an annual service fee per portfolio. Martinez expects that both fees will be paid from fund assets as director education is a legitimate fund expense.

The firm has five employees in its Boston office and two more in Ohio. Martinez expects to add to the staff in the Fall when the firm begins to sell the service.  

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