From: Keith Stracchino
SEC Chairman Christopher Cox
Dear SEC Chairman Cox,
Mutual funds are an increasingly important savings vehicle for tens of millions of working Americans. We are the owners of these funds and we bear the risks if they are dominated by self-interested insiders. We look to the Securities and Exchange Commission (SEC) to discharge its duties properly in order to protect us. I am writing to express my strong support for the proposed rule requiring that mutual fund boards have an independent chairperson and at least 75 percent independent directors. These rules were among the most important reforms adopted by the SEC in the wake of the mutual fund trading and sales abuse scandals.
A recent study by AFSCME and The Corporate Library found mutual funds provide a rubber stamp for excessive management pay, supporting more than three-quarters of all management pay proposals. Ninety percent of institutional investors think the current system overpays executives. We need independent directors with the will to discharge their responsibilities honestly and to stand up to the excesses of the money managers.
The Investment Company Act requires that mutual funds be managed in the interests of their shareholders. Requiring independent directors and chairmen will help ensure this safeguard for the small investor. We need the greatest possible separation between the compensation of company executives and the compensation of board members, in order to avoid collusion on mutual pay and fee increases. Ideally directors fees should be set and voted upon by shareholders annually; company management should have no part in the directors fee setting and approval process. There is ample evidence to show that the present system does not work for shareholders benefit and that it is seriously corrupted.