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Rating:Seen and Heard at ICI's 2015 MFIM Not Rated 0.0 Email Routing List Email & Route  Print Print
Thursday, March 19, 2015

Seen and Heard at ICI's 2015 MFIM

Reported by Neil Anderson, Managing Editor

This week 1,205 fundsters and fundster allies gathered in Southern California's desert for the Investment Company Institute's (ICI's) and Federal Bar Association's 2015 Mutual Funds and Investment Management Conference.

From Sunday evening through Wednesday morning, attendees packed into sessions and the golf course alike at the JW Marriott Desert Springs in Palm Desert and of course they threw in some networking breakfasts, lunches, wine tastings, cocktail receptions, dinners, and offsite adventures in the surrounding desert and mountains. Oh, and don't forget the popular tennis tournament BNP Paribas Open taking place around the corner.

If you didn't make it out for the conference this week (or if you just want to compare notes), take a look at MFWire's hot topics of discussions:

3/19 - "Big Data Cross-Pollinates at the SEC"

3/18 - "What's On the Radar of the SEC's Top Cop?"

3/18 - "This Is What Makes SEC Examiners Pull Their Hair Out"

3/17 - "Beware Shadow Regulation on Mutual Fund Distro";

3/16 - "SEC Commish to Banking Regulators: Keep Your Failures Away From Asset Management";

3/16 - "ICI's Blass Sees Diamonds, Not Shadow Bankers";

3/15 - "1,205 ICers Gather in the Desert".

For a taste of what it was like to attend this year's MFIM, keep reading.

Piwowar For Systemic Risk Regulator!

David Blass, the SEC veteran who joined ICI last fall as general counsel, seemed to kick off, at least semi-seriously, a campaign to get one of the Securities and Exchange Commission's (SEC's) five bosses onto a new super-regulator that has been making noises about labeling some large asset managers, including mutual fund shops, with the ominous "systemically important financial institution" label.

"We just need to get you on the FSOC [Financial Stability Oversight Council]," Blass said when introducing SEC Commissioner Michael Piwowar, who is only the third PhD economist ever to hold an SEC commissioner spot.

"I have been trying to get on the FSOC," Piwowar replied. "They just won't let me in the room."

Piwowar told attendees that it's "always a pleasure to return" to Southern California where he went to high school. Thanks to those roots, he said the first thing he did upon arriving in the area was go to a nearby In N Out Burger and order the local chain's signature dish "animal style."

In his keynote speech, Piwowar suggested to fundsters that cowboy code of ten principles of singing cowboy Gene Autry would "work pretty well for investment advisors [i.e. mutual fund shops] and regulators."

My, How Things Have Changed

This year's conference was, in part, a three-way diamond anniversary celebration. 2015 marks the 75th anniversary of: the passage of the Investment Company Act of 1940; the passage of the Investment Advisers Act of 1940; and the creation of what is now the ICI.

At the end of her conference welcome speech on Monday morning, conference chair Heidi Hardin (senior vice president and general counsel for Janus) showed attendees a special video about mutual fund history, in honor of the big anniversary of the modern mutual fund business. The video traced all the way back to early pooled investments about two centuries ago and then came back to the future, highlighting how far the industry has come. It closed by invoking fundsters' duties of accountability, loyalty and disclosure, with the promise that "some things haven't changed and never should."

One female mutual fund industry insider reminded attendees how far the industry has come even within recent decades. She told the tale of excitedly attending her first mutual fund board meeting some time ago, at which she ended up regularly whispering in the ear of a hard-of-hearing board member.

"They all seemed to be men over 75," she recalled.

So Many Mutual Fund Questions, So Little Time

Fundsters continue to see technological changes, too. Mobile apps are all the rage, and this year's MFIM featured a conference app with a new feature: the ability for attendees to submit questions electronically.

Between the app and the blue index cards at attendees' seats, fundsters repeatedly took the speakers up on their offers to answer questions. In one general session in particular, the "OCIE and Enforcement: A Discussion of Roles and Responsibilities, Priorities, and Coming Attractions" panel yesterday morning, audience questions ended up driving much of the discussion onstage. The panel featured two key SEC officials.

"We're about a couple questions from the Guinness World Record," Michael Downer, senior vice president and secretary at Capital Research and Management Company and moderator of the panel, quipped near the end of the session.

Where Is the SEC Pointing Its Missiles?

The same panel touched on fundsters' fears about chief compliance officers being targeted in the SEC's examinations and enforcement actions.

"Why would I want to sign up to be a CCO and be the person who the missile is pointed right to?" Downer asked.

"There's no missile pointed at you," replied Drew Bowden, director of the SEC's national examination program.

Fighting the Revisionist History Coming From Bank Regulators

The efforts of the FSOC and banking regulators to try bring their attempts to minimize systemic risk to the asset management space was a hot topic of concerned that came up time and again at the conference. One specific worry raised is such regulators' tendency to look back at history like the financial crisis and point to problems that supposedly could have happened, or problems they think happened but fundsters say didn't.

"It's almost like trying to convince someone who believes that the moon landing was faked," Craig Tyle, executive vice president and general counsel for Franklin Templeton, said when moderating the "75 Years and Counting: Building on the Strengths of Investment Company Act Regulation" panel Monday morning.

We'll Take the SEC Over Congress, Thanks

On the Monday morning panel moderated by Tyle, Rose DiMartino, partner at Willkie Farr & Gallagher, reminded attending fundsters that they should be thankful that the SEC has the legal authority to grant exemptive relief. She noted that manager of managers, money market mutual funds, ETFs, and now Eaton Vance's ETMFs all at least initially got their start thanks to exemptive relief granted by the SEC.

"The exemptive application for exchange-traded managed funds took six years," DiMartino told MFIM attendees. "Imagine how long it would be going to Congress every time you had to deal with an innovation in the industry!"

ICI Eats

Since when does continental breakfast include hot food like eggs, quiche, breakfast burritos, chicken apple sausage, local canadian bacon, or ham? Between the official meals and snacks on the one hand and the vendors' parties and briefing on the other hand, fundsters at this week's MFIM had plenty to choose from when eating and drinking. Here are some highlights:

  • mussels a la roja, ham croquettes, spicy chorizo cooked in cider, and other tapas at UMB's cocktail reception on Monday evening;

  • roasted almonds, roasted local pistachios with sea salt, and sugar-charred walnuts at a break from sessions;

  • a host of breakfast and snack shooters, including panache of fruit shooters with agave and natural yogurt, organic watermelon shooters, and greek yogurt with agave nectar and coachella valley date shooters;

  • organic deviled eggs at a break;

  • a build your own trail mix station, with almonds, chex cereal, coconut, diced dried fruit, granola, M&Ms, peanuts, pretzels, and wasabi peas to choose from;

  • a fruit smoothie station with two fresh made options, the "Berry Bullet Smoothie" made of almond honey, blackberries, organic apple juice, and strawberries, and the "Green Bullet Smoothie" made of almond milk, avocado, cucumbers, flaxseed, greek yogurt, honey, and spinach;

  • beef, chicken and shrimp stir fry with fried rice and miniature Chinese takeout containers, at the opening reception Sunday night;

  • chicken, pork, shrimp, and vegetable Chinese dumplings, also at the opening reception;

  • pork belly, chicken, and black bean sliders, also at the opening reception;

  • mahi mahi fish tacos, also at the opening reception;

  • tuscan kale and romaine salad in mason jars, also at the opening reception;

  • cheesecake lollipops, caramel eclairs, tiramisu, and other deserts, also at the opening reception.

    The opening reception, sponsored by Gunn, Steers & Company, also featured a '40 Act Fizz "specialty cocktail" to celebrate the big anniversary. The drink included champagne mixed with creme de cassis.

    Fundsters who attended the opening reception each received a pair of sunglasses, with black lenses and frames with choice of fluorescent green, fluorescent pink, or fluorescent yellow temples. (MFWire picked green, in honor of our sister publication, 401kWire.)

    The next MFIM is scheduled for March 13-15, 2016, in Orlando. 

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