SEC Reaching Out to Compliance Officers

Securities and Exchange Commission Chairman William H. Donaldson said Monday that the agency was asking mutual fund compliance officers to report problems at their companies to the SEC’s inspections office.

Donaldson, speaking to fund industry executives in Palm Desert, outlined a new effort to open communications between the SEC and the officials responsible for monitoring funds’ compliance with securities laws. As part of the “outreach” program, the SEC will hold seminars to explain how it conducts inspections and publish a newsletter for compliance officers.

“We at the commission are committed to providing assistance to chief compliance officers,” Donaldson said in prepared remarks for a speech at an Investment Company Institute conference. They are “our allies in our parallel mission to protect investors.”

The SEC has been tightening regulation of the $8-trillion fund industry during the last two years, responding to trading and sales scandals that regulators say harmed long-term investors. The agency requires mutual funds to have chief compliance officers who report to the board of directors.

Donaldson said the SEC wanted the officials to report back to the agency on “emerging issues and questions.” The regulator isn’t trying to “deputize” compliance officers “as agents of the SEC,” he said.