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Forum Releases List of Top 5 Issues Facing Directors in 2014

The Forum has released a list of what it sees as the "top 5" issues that fund boards will likely face in 2014.  The list includes:

  • Board oversight of distribution related expenses – With recent Securities and Exchange Commission (SEC) sweep activity in this area asking for board minutes, and warnings from SEC officials about payments for distribution “in guise,” this is likely to be an area of focus for most boards in 2014.

  • Board oversight of valuation – Despite a promise that issuing guidance was a top priority, SEC officials have not thus far published additional assistance for boards overseeing fair valuations.  The SEC most recently addressed valuation in its settlement of the Morgan Keegan matter, and SEC officials continue to put valuation issues on the top of the enforcement and inspections agendas.
  • Board oversight of alternative investments – As investors continue to seek returns not correlated with major market indices, more fund boards are now overseeing “alternative” investments, with products and strategies that may be new to their fund complex.  In 2014, these directors will be challenged with appropriately identifying the key oversight issues involved in alternative funds.
  • Corporate governance – Fund boards in 2014 will continue to build skill sets necessary to address increasingly complex financial markets. This focus will be particularly important when key directors begin to approach retirement ages. “This trend is one of the reasons the Forum launched its Director Candidate Database in 2013,” said Wyderko. “It contains names and resumes of many highly qualified board candidates, in an effort to facilitate board consideration of possible candidates.”
  • An increasingly aggressive Inspections program – As what previously had merited only a comment from an Inspections team is now more likely to generate a potential referral to Enforcement, fund boards will want to continue to aggressively monitor compliance efforts.  The fund industry’s relationship with the Division of Investment Management has changed in many respects over the past few years to becoming more contentious and less collaborative on issues of broad policy significance.

The complete release can be found here.