From: Robert F. (Bob) Barry
SEC Chairman Christopher Cox
Dear SEC Chairman Cox,
Mutual funds are an increasingly important savings vehicle for tens of millions of working Americans like me. 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 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 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 chairpersons will help ensure this safeguard for the small investor, to make sure the little person gets a fair shake.
Not only do we invest for the future but some or all of our income stems from these funds, especially bond funds and the capital gains from equity funds.
Because of the way the economy now stands, many large investors are investing in high-yield bond funds to refinance other debt. This is fine for them but creates an inverse yield curve which lowers the dividend for the small investor like me. One particular fund that I own was paying $.087 per share 4 years ago. While the share price of that fund has increased the yield per share has dropped to $.034 per share, approximately a 60% decrease in my income from that fund, causing approximately a 40% decrease in my annual income when including all of my other Mutual Funds. Not only does that increase my debt but totally deflates my ability to save (as the President wants me to do).
Robert F. (Bob) Barry