Securities and Exchange Commission exams this year will demand more information about how independent directors conduct 15(c) contract renewal than ever before. Examiners will likely want detailed explanations of what materials directors requested and proof they received it, and they will look especially closely at how boards approach renewing contracts for funds with low returns and high fees.
Asset management partner Jessica Reece told BoardIQ that, “The SEC and the [exams] division are thinking about and pushing on process. They want to understand how advisors and boards are thinking about what they do… They want to see the process all the way through in a way we haven’t historically seen.”
“To prepare for exams, boards should make sure to build a record reflecting that they’re engaged in their oversight processes,” Jessica said. She noted that a strong record is not necessarily voluminous but must show that directors asked questions, followed up on the information they received, and adjusted their practices as needed.
“A strong record is one that reflects the back and forth with the board and the advisor,” Jessica said.
Stay Up To Date with Ropes & Gray
Ropes & Gray attorneys provide timely analysis on legal developments, court decisions and changes in legislation and regulations.
Stay in the loop with all things Ropes & Gray, and find our more about our people, culture, initiatives and everything that’s happening.
We regularly notify our clients and contacts of significant legal developments, news, webinars and teleconferences that affect their industries.