Insights

Fund Democracy Insights, which was published from June 2001 to June 2002, was a newsletter for fund industry professionals that discussed the interrelationship between fund policies and operations, and fund regulations. To obtain copies of past issues of Fund Democracy Insights, please contact Mercer Bullard at bullardm@funddemocracy.com.

June 2001: Fund Democracy dissects the House Financial Services Committee's plans for mutual fund reform, explains why the SEC adopted its new fair-value pricing requirement and what it means for funds, and lays out the future of multi-manager funds.

July: Fund Democracy explores the ramifications of differential pricing by mutual funds -- what it will mean to fund regulation and the viability of mutual funds as investment options for private Social Security accounts. A Special Edition of Fund Democracy Insights provides excerpts from and commentary on mutual-fund related speeches by the late Commissioner Paul R. Carey.

August: Fund Democracy plumbs the depths of the SEC's policy on mutual fund redemption fees. The policy's questionable legal basis and other policy considerations favor a broad reevaluation of the SEC's position.

September: Fund Democracy explores the politics and policies of 12b-1 fees. In a recent fee study, the SEC staff recommended minor changes to rule 12b-1. This issue discusses these and other 12b-1 reforms that the SEC will likely consider in the near future.

October: Fund Democracy considers emergency exemptions granted by the SEC in the wake of the September 11 tragedy, problems created by section 22(e) in such emergencies, and the relationship between mutual fund fee waivers and mutual fund rules.

November: Fund Democracy proposes an alternative approach to the regulation of fund fees, discusses the differences between the federal and state conceptions of fund directors' roles, and evaluates the Gartenberg standard of review under section 36(b) in today's market.

December: Fund Democracy reviews the SEC's concept release on managed exchange-traded funds and the flaws in the exemptive application process that it reveals; the NASDR's misguided requirement that ETF's market price (as opposed to NAV) performance be included in ETF ads; and the regulatory significance of self-selection by fund shareholders.

January: Fund Democracy evaluates the SEC's proposed amendments to rule 17a-8, its view of the relationship between federal and state securities regulation, the question of when shareholders should vote on fund mergers, and the relevance of the key determinants of fund mergers to fund regulation.

February: Fund Democracy considers the assumed equivalence of sell- and buy-side analysts' conflicts of interest under NASD and Congressional proposals to enhance analyst disclosure requirements, the potential effect of the Enron debacle on mutual fund regulation, and the effect of the expansion of the definition of "interested person" by the Gramm-Leach-Bliley Act on independent fund directors.

March: Fund Democracy reviews the rules governing the appointment of SEC Commissioners and considers that possibility that the appointment of a number of SEC Commissioners has been unauthorized, and that the tenure of other Commissioners has been improperly cut short.

April: Fund Democracy (1) reviews the rising profile of fund auditors caused by fallout from Enron, civil lawsuits against fund auditors, and fund auditors' increasingly complex pricing responsibilities, and (2) proposes needed reforms in the SEC's exemptive application process.

May: Fund Democracy (1) explains why the time is right for a unified fee investment company (a structure proposed by the SEC staff a decade ago), (2) dissects the court's analysis in Vanguard v. Standard & Poor's, and (3) analyzes the ascendance of the superstar brand in the field of index investing.

June 2002: Fund Democracy discusses regulatory issues that are likely to occupy the SEC in the near term, and proposes a model for mutual fund regulatory reform.

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