Independent mutual fund directors should use chief compliance officers as a resource for identifying conflicts of interest and practices that can compromise investor interests, Paul F. Roye, director of the SEC's investment management division, said today in a speech in New York. He said independent mutual fund directors should be asking CCOs for information about any potential conflicts of interests uncovered in periodic tests of compliance procedures and about tightening compliance procedures to address any conflicts. "If no compliance changes are being made in light of material compliance problems, you should be asking why not," he said.
"I fully understand that conflict oversight and management is not always easy - but it is a core part of your responsibilities as independent fund directors, particularly because of the conflicts inherent in the external management structure of mutual funds. Because of these conflicts, you should approach issues with a healthy dose of skepticism and a commitment to questioning transactions and other arrangements," he added.
