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Communications from the Institute do not constitute, and should not be considered a substitute for, legal advice.
[18991]
July 1, 2005
TO: CHIEF COMPLIANCE OFFICER COMMITTEE No. 51-05
RE: SEC STAFF PROVIDES ASSURANCES RELATING TO DUAL CCO ARRANGEMENTS
An issue has come up at recent meetings, including a recent industry meeting in
Washington, DC, regarding the SEC’s views on individuals who serve as chief compliance
officers for both mutual funds and the funds’ investment adviser. Specifically, there is some
concern that staff in certain SEC regional offices may view these “dual CCO” arrangements as
inherently suspect and may be expressing an inappropriate level of skepticism during routine
examinations.
The Institute recently contacted senior SEC staff about this concern. The staff
acknowledged that the SEC’s release adopting Rule 38a-1 specifically notes that a CCO is likely
to be employed by both the adviser and the funds it advises, and is likely to be the CCO of
both.1 The staff provided assurances that the SEC’s examination program will proceed with an
appreciation of Rule 38a-1 and the pronouncements with which the Commission adopted and
released it.
Should your experience going forward suggest otherwise, or if you have other concerns
about the SEC’s administration of Rule 38a-1, please contact the undersigned at (202) 326-5923
or at bsimmons@ici.org.
Barry E. Simmons
Associate Counsel
1 As noted in the adopting release, the Commission decided not to preclude a fund CCO from being an employee of
the adviser or any other service provider because of concerns that such a provision “would actually weaken her
effectiveness” and “she would be divorced from all fund operations.” SEC Release No. IC-26299, 68 Fed. Reg. 74714
(Dec. 24, 2003) at 74722.