On March 18, 2013, Norm Champ, the Director of the SEC’s Division of Investment Management, delivered the keynote address to the 2013 Mutual Funds and Investment Management Conference. His remarks focused on a number of initiatives by which he stated that the Division is seeking to improve its “eyes and ears” and gain a better understanding of the workings of the fund industry. He stated that one way the Division will accomplish this is by meeting with fund directors. Mr. Champ’s speech follows the SEC’s announcement of its examination priorities for 2013 for investment advisers and investment companies, where the staff announced it would be interviewing fund directors.
Mr. Champ stated that given the critical oversight role of fund directors, the Division will “need to ask some tough questions” of them, including:
Mr. Champ added that the Division is also interested in hearing from directors about “areas where directors believe they are adding value and, in contrast, about areas where they feel that their oversight is more difficult to manage.” He stated that the list of questions for directors is not yet final, and the Division has additional questions in mind.
While in his speech Mr. Champ said that the meetings with fund directors “underscore … the value of dialogue and two-way communication”, his list of questions and the relatively strong language used to ask those questions are worth bearing in mind and may well suggest some real skepticism about the answers the Division expects to hear.
Directors will want to be considering the questions posed by Mr. Champ, and, if the SEC staff seeks an interview, should work closely with counsel to ensure they are well prepared.
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Copenhefer-Lea-AnneThis article was originally published by Bingham McCutchen LLP.