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WSJ Discusses Potential Impact of RMK Case on Fund Industry

According to the Wall Street Journal, the Morgan Keegan valuation case may be a sign that the SEC is increasing its scrutiny of mutual fund directors and could hold them more accountable than the agency has in the past.  Last month, Bruce Karpati, chief of the SEC’s asset-management enforcement unit, said the SEC is “looking at directors closely” and that the Morgan Keegan case should send a “significant deterrent message…to the industry.”  The Journal describes the impact this could have on the industry:

John Morley, a law professor at the University of Virginia, says the case could have a "significant impact" on the willingness of people to be mutual-fund directors. If too many are reluctant, mutual funds might have to "start paying directors more," he adds. That would push fund expenses higher and erode returns.

The full article is available here (subscription required).