From: John Keenan
Sent: August 19, 2006
Subject: File No. S7-03-04

SEC Chairman Christopher Cox

Dear SEC Chairman Cox,

I urge the SEC to require an independent chairperson on mutual fund boards. Too often mutual funds are designed to enrich fund insiders and management. The role of independent directors is critical to ensure the protection of small, individual investors.

In the wake of the market timing and late-trading scandal, the SEC wisely acted to ensure fund independence. Mutual fund boards are now expected to ask more questions, have resources to independently measure the performance of the management company, and challenge fund management when it raises proposals that might run counter to the best interests of shareholders.

A recent study by the American Federation of State, County, and Municipal Employees and the Corporate Library found that mutual funds provide a rubber stamp for excessive management pay, supporting over three-quarters of all management pay proposals. Ninety percent of institutional investors think the current system overpays executives. Independent directors are needed to stand up to the excesses of the money managers.

Other studies have found that mutual fund boards that were larger in size and had more outside directors were the most likely to replace underperforming directors.

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 small investor gets a fair shake.


John Keenan