MutualFundWire.com: Morgan Keegan Fallout Affects Directors Everywhere

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Monday, March 25, 2013

Morgan Keegan Fallout Affects Directors Everywhere

Fund firms are going to have a tough time getting people to serve in the board room thanks to the SEC's case against Morgan Keegan directors, according to the Wall Street Journal.

The securities regulator first launched the case against the six former fund directors in in December, alleging that they "addicted" their responsibilities managing five mutual funds that ultimately blew up.

The case has already led to the resignation of one big-time accounting honcho.

Here is how the WSJ describes the potential complications from the case:

John Morley, a law professor at the University of Virginia, says the case could have a "significant impact" on the willingness of people to be mutual-fund directors. If too many are reluctant, mutual funds might have to "start paying directors more," he adds. That would push fund expenses higher and erode returns.