On November 2, 2010, the SEC staff issued a letter to the Chairs of the Independent Directors Council and Mutual Fund Directors Forum regarding the responsibilities of fund directors with respect to affiliated transactions under Rules 10f-3, 17a-7 and 17e-1 under the 1940 Act. These rules permit funds to engage in otherwise prohibited affiliated transactions provided that fund directors fulfill certain responsibilities, including making a determination at least quarterly that all such affiliated transactions made during the preceding period were effected in compliance with the procedures adopted by the board under the applicable rule. The letter was issued in response to the SEC staff’s observations that some boards believe that they can delegate their responsibilities to make such determinations under the rules. The letter notes that, while the rules do not specify how boards should make such determinations, boards retain the ultimate responsibility for making the determinations required by the rules and cannot delegate such responsibilities.