In recently submitted comment letters, multiple boards told the Securities and Exchange Commission demanding all funds use swing pricing would cripple operations, inflate costs, reduce the attractiveness of mutual funds, and ultimately harm investors. The response was prompted by rule amendments proposed last year and is the loudest director outcry in years.
Asset management partner Paulita Pike told BoardIQ that, “this is the first time I can remember where boards are weighing in wholesale on a proposal that doesn’t have to do with governance, doesn’t have to do with board effectiveness. They’re weighing in because of the effect it’s going to have on their shareholders – how it changes the landscape, the lack of data.”
A sentiment in many of the letters, she said, is a call for more proof that swing pricing is needed, that “if there is an issue, please quantify that.” “But short of that, I just see fiduciaries who decided to write in because this set of proposals is terrible for their investors.”
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