Speech by SEC Chairman:
Opening Statement on Portfolio Manager Disclosure at Open Commission Meeting
Chairman William H. Donaldson
U.S. Securities and Exchange Commission
August 18, 2004
The next item on our agenda this morning is a recommendation from the Division of Investment Management that we adopt amendments to our registration forms that will require mutual funds and certain other investment companies to provide basic information about their portfolio managers, as well as information regarding their financial incentives and potential conflicts of interest. This disclosure was designed principally to assist investors in evaluating fund management in making their investment decisions.
Obviously, the investment adviser must be the fund shareholders’ first line of defense when it comes to controlling potential conflicts of interest in the management of the fund’s portfolio. However, the existence and depth of these conflicts between the interests of fund investors and fund managers, and the way that these conflicts are monitored and controlled by the fund’s adviser, may be important components in the total mix of information that a shareholder considers when evaluating a fund.
While I believe that, if taken too far, this type of disclosure has the potential to seriously intrude on the privacy of portfolio managers, I also believe that the final amendments are a fair and balanced approach to these competing policy concerns. Therefore, I support the staff’s recommendation in this matter.
Our thanks go to Paul Roye and the members of his staff who worked on this recommendation – Susan Nash, Paul Cellupica, Christopher Kaiser, and Sanjay Lamba – congratulations on a fine job.
Now, Paul could you please give us the details of your recommendation.