In a move that casts doubt on the future of mutual fund regulation, the SEC has announced that its chief mutual funds legislator, Paul Roye, will step down, effective immediately.
The SEC has given no indications about a successor, but the industry is bracing itself.
“Don’t expect the next guy or lady to be any softer than he was,” says one fund executive. “The SEC is on this, and they won’t let go, no matter who the top dog on funds is.”
In a statement, SEC Chairman William Donaldson said Roye had been planning on leaving his post for “about a year now,” but was asked to remain on board while ongoing mutual fund regulation was still being debated. He stayed long enough to see some changes through, but others remain unsettled. Among the measures that passed on Roye’s watch: a controversial rule setting requirements for mutual fund board independence, and another requiring hedge funds to register with the SEC. Perhaps the most important outstanding measures are those that would curb late trading and market-timing. These are still in the discussion phase.
Roye initially faced considerable criticism for failing to anticipate the scandals that happened early on his watch, but he recovered to become a loud critic of mutual fund abuses, calling them “reprehensible by any standard.”
Roye had run the SEC’s investment management division since 1998, and the SEC statement said he would be “pursuing options in the private sector.”
Donaldson said there is no timetable for finding a new leader on the mutual fund front.