Independent directors are taking their show on the road. The newly formed Independent Directors Committee (IDC), a part of the Investment Company Institute (ICI), is already shaping up to be a media-savvy group. The IDC is conducting media-only meetings in East Coast hubs this week.
, an independent director of Merrill Lynch Funds and chairman of the IDC, and other independent directors met reporters in Washington, D.C. on Tuesday and in New York on Wednesday morning. The New York meeting -- which was held in an intimate room at the Hyatt hotel near Grand Central Station -- included roughly a dozen reporters, including representatives from the Wall Street Journal and USA Today.
An IDC event organizer mentioned that the council is considering holding a meeting in Boston, but jokingly said that they could run out of reporters covering the fund industry after Beantown. The council is considering how often to hold the media meetings, and whether or not they should be of a smaller size, he said. The meetings may be held as often as quarterly, he added.
Besides Bodurtha, Vanessa Chang
, a director on an American Funds board, and Samuel Eisenstat
, a director of AIG SunAmerica funds and head of the IDC's communications committee, addressed the media at the meeting. Maguerite Bateman
, managing director of the IDC, was also present.
After Bodurtha, Chang and Eisenstat spoke briefly on one SEC rule apiece, (the chief compliance officer, the independent chairman and contract disclosure proposals, respectively), the directors opened the floor to questioning.
Reporters spent what seemed the bulk of the time questioning the directors on the independent chairman issue, and on the independence of fund boards, generally.
The line of questioning was best summed up by a USA Today
reporter who asked why fund boards are not independent enough to fire fund management. The directors' responses? Because investors buy funds for the management companies, the firing of advisors is the last thing that fund shareholders want have happen. The directors explained that more practical remedies include firing portfolio managers, or renewing fund management contracts for shorter durations.
Trying to switch gears, Tom Lauricella of the Journal
closed in on the omnibus issue. Lauricella said he was "puzzled" about funds' ignorance of their ultimate shareholders. Seated in a commanding position at one end of a long table, the star fund reporter spent a bit of time wondering aloud why funds willingly let brokerages take control of the relationship between shareholders and the very products they buy.
Bodurtha primarily responded to this question, saying that funds certainly want to know who their shareholders are, but shareholders do not want their identities known.
All in all, the reporters present (including this one), were appreciative of the meeting. Bodurtha concluded the meeting by asking whether the event was helpful, and most nodded their heads in agreement.
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