The Director of the SEC’s Division of Investment Management seeks a “successful collaboration” between fund directors and the SEC staff to further a common purpose: to protect investors.
In October remarks to the Independent Directors Council, Norm Champ said fund directors protect fund investors through oversight as “independent watchdogs,” and noted that the SEC’s mission is also to protect investors. Champ sees “common themes to our mission to the role that independent directors play,” and wants to advance that common purpose.
The key to a successful collaboration, Champ said, is communication between fund directors and the staff.
Champ said that the staff seeks to continuously improve how it oversees funds. But fund directors, he said, have a “special perspective that makes your oversight different from but complimentary to ours.” Fund directors are on the “front lines,” and thus are best positioned to understand the funds they oversee, on matters ranging from valuation to distribution to advisory contracts and securities lending.
Champ said that the Division has identified a number of fund boards that the staff would like to meet with, and that some meetings have already occurred. In these meetings, the staff seeks to learn from fund directors about how specific fund risks are being managed and what directors view as critical risks to the industry. Champ said that these meetings allow the staff to “obtain a first-hand view of the systems, controls, personnel” and culture of fund firms, and that he hopes the meetings will result in “increased cooperation and more effective communication” between independent directors and the staff.
While some fund directors may think twice before accepting an invitation to meet with an SEC staff that has become increasingly aggressive in bringing enforcement cases against fund directors, Champ emphasized that the staff’s “interest in this collaboration is not new.” Moreover, he suggested that there is a benefit to this collaboration. “Working together, we are better positioned to accomplish our common mission of protecting investors,” he said.