SEC Chair Will Hold Fund Directors Accountable as “Gatekeepers”

In a recent speech at a fund directors’ conference, SEC Chair Mary Jo White repeatedly used the term “gatekeeper” to describe fund directors.  Ms. White said that directors must serve this gatekeeper function because investors don’t have time to conduct their own due diligence into fund service providers, investment risks and management.  Ms. White warned that directors will be subject to enforcement action when they “fail to perform their duties.”  Ms. White advised directors to ensure enhanced supervision in areas such as liquidity, valuation, cybersecurity, and service provider oversight.

OUR TAKE: The SEC has previously indicated that it will hold “gatekeepers” responsible for the wrongdoings of industry participants.  (See http://blog2.cipperman.com/2013/10/sec-will-target-gatekeepers-including-independent-directors-and-auditors/.)  In this speech, Ms. White makes clear that directors will be held accountable.

http://www.sec.gov/news/speech/chair-white-mutual-fund-directors-forum-3-29-16.html