The Forum recently released a paper titled The Board/CCO Relationship, which provides significant insights for fund directors and other fund industry professionals on elements of a fund board’s relationship with the fund Chief Compliance Officer (CCO). Rule 38a-1, adopted by the SEC in 2004, represented a transformative change for fund compliance. The new rule gave fund boards direct access to a single person responsible for fund compliance and gave fund boards significant authority over the relationship.
The CCO relies on relationships with personnel of the adviser in order to get the information necessary to oversee fund compliance. As a result, the relationship requires a delicate balance of the need for the CCO to effectively interact with adviser personnel, while addressing the needs of the fund and fund board. The paper is designed to assist boards in fostering an effective board/CCO relationship, and covers issues including:
- Common characteristics of effective CCOs;
- Different models for the CCO relationship;
- The process of developing a compliance program;
- Communication protocols; and
- Specific examples of compliance focus.