News Flash- Look at Transfer Agents, Roye Tells New Directors
April 12, 2004
To spot and stymie potential wrongdoing, pay closer attention to the inner workings of fund management companies, Paul Roye, director of the division of investment management at the SEC, recently told a group of new mutual fund directors.
Emphasizing the presence of transfer agents and the need for consistent and appropriate pricing, Roye explained the importance of the new compliance procedures rule to the future of the fund industry.
"Fund directors should be approving and periodically reviewing the policies and procedures of transfer agents against late trading by obtaining assurances that the policies and procedures are effectively administered," Roye said at the 2004 New Directors Workshop in Washington.
"In many cases, fund directors were left in the dark," Roye said, noting that a look at the lessons the scandal has taught is essential. "Fund directors must be at the heart of establishing a fund's market-timing policies and reviewing the methods the fund employs to alter market-timing actions," he continued. But he added that following up on those methods is even more essential.
A director who asks tough questions, brings "a healthy dose of skepticism," insists on compliance and demands accountability will be satisfying their job of protecting investors rather than fund managers, Roye said.
"As a new director," Roye said, "it will be difficult to go wrong if you are guided in your decision-making by what is in the best interest of investors."
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