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New Site Cultivates Trustee Community


If a new online company has its way, mutual fund boards of directors will have found a new home--on the web.

The new company, FundWatchDog.com, bills itself as "The e-learning community for Fund Directors." It seizes its name from the role directors serve as the watchdogs for fund investors.

FundWatchDog.com, which launched a few weeks ago after more than a year of preparation, wants to give mutual fund boards of directors exactly what they need to do their job better. That includes providing current industry news, information on industry trends, and a place to archive all relevant SEC, and NASD materials. That includes speeches by officials, regulatory letters, pronouncements and both proposed and adopted rules.

But most importantly, FundWatchDog.com wants to provide fund board trustees with a secure, privately labeled e-boardroom site at which fund management can easily communicate with trustees by e-mail, trustees can communicate with each other or their independent counsel and at which often cumbersome board meeting materials and fund complex-specific information can be electronically disseminated.

Industry Vets Brainstorm

The company was the brainchild of a pair of well-known industry leaders. Michael Lipper, currently president of Lipper Consulting Services, Inc., will serve as the chairman of FundWatchDog.com. He founded what's now known as Lipper, Inc., the fund data and research company that he sold to Reuters three years ago.

George Martinez will serve as the company's CEO. Martinez began his career as a senior attorney with the SEC's Division of Investment Management, served 11 years as a lawyer at Alliance Capital Mgt., headed up third-party administration for BISYS Fund Services and most recently ran the third-party legal administration service for State Street Bank.

The concept of launching a special Web site just for mutual fund directors was conceived of in response to the Investment Company Institute's June 1999 Director Best Practices Report which identified fund director education as a "best practice," said Martinez. "I used to go to a lot of board meetings and I came to realize that most of the board members are very educated, but they don't come from our industry, so how can they know what to ask?"

He saw the opportunity to create a business specifically tailored to the needs of fund directors, both those that are affiliated or work for the fund advisory company and those that have no ties and serve as independent trustees.

While some of the larger fund groups have been working to create their own proprietary secured site for their own board trustees, it just made more sense to outsource that task, Martinez said.

No Ties to Industry Groups

The site is purposely maintaining a safe distance from industry players. It will have no ties to the fund industry regulator, the SEC, or the ICI that generally caters to the management companies that make up its membership. "We want to make our main focus board members," Martinez said.

Moreover, FundWatchDog.com will be run independently from the Mutual Fund Directors Education Council at Northwestern University's law school, which was begun in late 1999 and is being chaired by former SEC Chairman David Ruder.

Among the services FundWatchDog.com will offer, the site will provide online training courses specifically developed for mutual fund directors by the industry's leading professional services firms.

A 29-member advisory board that reads like a who's who of the mutual fund industry will review all materials and courses provided to directors, Martinez said. Advisory board members include investment management practice attorneys, fund company executives and lawyers, representatives from the Big 5 accounting firms, and independent directors.

Data Storage and e-Boardrooms

Individual board sites will feature an information area where items can be stored, such as a board's Code of Ethics, each fund's most recent prospectus and shareholder reports, monthly sales and redemption statistics or even current fund advertisements.

FundWatchDog.com may also be the first company to effectively leverage Internet technology by creating separate e-boardrooms. Fund board members can check in 24/7 for special news updates about the funds they oversee, access formerly paper-based board meeting agendas and study materials as well as archived board meeting minutes and communicate via e-mail with other board members. This is simply a much more efficient way to coordinate all of the many details of the board, Martinez noted.

What the virtual boardroom won't do is allow directors to forgo good old-fashioned face-to-face board meetings that the law requires trustees to be physically present at when voting on certain specific issues.

But even those trustees who are not tech savvy or are Internet shy can participate, Martinez said. As part of FundWatchDog.com's membership, all board members will be given a laptop computer and taught how to use both the computer and the Internet site.

Although Martinez declined to discuss specific membership costs, there are two levels of membership. Full membership allows all board members, as well as fund management and counsel to the independent trustees to access all portions of the site including the specially designed e-boardroom customized for each group. A three-year minimum membership is required to qualify for the free computers. Membership fees can be assessed based upon either the number of portfolios involved or the assets under management.

A more limited associate membership is available to professional services firms who may access all but the inner sanctum e-boardroom areas.