In the December 2014 issue of Fund Directions, Investment Management partner Jay Baris discusses in the "Learning Curve" column challenges faced by mutual fund directors as they struggle to comply with new valuation guidance from the Securities and Exchange Commission. The long-awaited guidance appeared without fanfare—buried in the 869- page release adopting money market fund rule amendments published in July—but it may transform the way directors approach fair value of portfolio securities held by all funds, not just money market funds.
In the release, the SEC reminded fund directors that they have a non-delegable statutory duty to determine the fair value of portfolio securities when market prices are not available. The Commission was clear: While directors may "appoint others" to "assist them in determining fair value," the responsibility to actually determine fair value lays at their feet.
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