Regs hard on mutual funds, says survey

One third of 154 board members and fund executives polled are now spending more than 50 hours per quarter managing board responsibilities, according to the PFPC Mutual Fund Board Study, from PFPC Worldwide Inc. of Wilmington, Del. The extra work has proven too much for the faint of heart, as 25% of the respondents said that at least one board member left because of the extra time spent on the heavier regulatory burden. In order to keep up with new regulations, including the SEC Rule 38a-1, which requires directors to review and approve compliance policies, boards have expanded their membership. Forty per cent of those polled said that their boards have added more directors because of these new regulations. “Fund boards are getting larger out of necessity in response to the reforms introduced by Sarbanes-Oxley – greater transparency and accountability – and the increased compliance and controls that came out of SEC Rule 38a-1,” said Linda Hoard, senior vice president and senior counsel at PFP, in a statement. It doesn’t help that directors are having a hard time finding new candidates, either: 58% say that it has been difficult to recruit qualified people as audit committee financial experts. Nevertheless, seven out of 10 directors polled said that investors have benefited from the increased disclosure.