“This aspect of the proposed settlement potentially emasculates the authority of independent directors at the very time that the commission is seeking to enhance their oversight responsibilities,” said Mutual Fund Directors Forum Chairman David Ruder and President Allan Mostoff in the group’s letter to the SEC. The group, which represents mutual fund board members, ultimately believes such a requirement would undermine the role of independent fund boards.
The SEC and New York Attorney General Eliot Spitzer said Bank of America trustees ignored trading abuses in their funds and should be held accountable. The interest group agrees the trustees should be removed, but argues the action should be taken by the SEC as opposed to fund managers.
In March, Charlotte, North Carolina-based Bank of America agreed to pay $375 million to settle allegations that the bank’s executives allowed improper fund trading (See BofA, Fleet Near Settlement With SEC, Spitzer ). In addition to the monetary payouts, the financial institution agreed to certain reforms as part of the agreement, including the replacement of eight fund trustees within a year.