John M. Ford Quoted in BoardIQ Article, 'New Director Duties Under SEC's Proposed Liquidity Rule'
John M. Ford, co-chair of the Financial Services Practice Group and vice chair of the Investment Funds Industry Group of Pepper Hamilton, was quoted in the October 6, 2015 BoardIQ article, "New Director Duties Under SEC's Proposed Liquidity Rule."
"It's a challenge for sure," says John Ford, a partner at Pepper Hamilton. "What happens in a boardroom now is there's a quarterly report on liquid and illiquid positions so boards are looking at liquidity. But you have to have a particular knowledge base to engage in meaningful scrutiny."
"Grading out liquidity in a non-binary world feels a lot like fair valuing to me," he adds. "Much like valuation, most boards are not well suited to independently determine [liquidity] on their own."
The more numerous the categories become, "the more art than science it becomes," Ford says. "Is it 60% liquid? Is it 52% liquid?"
If the rule is implemented, boards may hire independent consultants to support directors' analysis of the programs, Ford says.
"Boards would like more guidance," he says. "You hope you'll get a lot more additional guidance as the comments come in and the SEC digests those comments."
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