FYI: The SEC’s Division of Investment Management has issued a no-action letter indicating that fund Boards can rely on quarterly written CCO certifications that transactions entered into in reliance on certain Exemptive Rules were effected in compliance with fund procedures, instead of the Boards having to make that determination themselves. According to the no-action letter, this is consistent with the Commission’s approach in adopting Rule 38a-1 and allows Boards to avoid duplicating certain functions commonly performed by or under the supervision of the CCO. Although this does not change the Board’s oversight role with respect to a fund’s overall compliance program, it does facilitate the Board’s ability to focus on conflict of interest concerns raised by affiliated transactions, including whether a fund engaging in the types of affiliated transactions permitted by the Exemptive Rules is in the best interest of that fund and its shareholders.
Transactions contemplated by the no-action letter are those effected in reliance on Exemptive Rules 10f-3, 17a-7 and 17e-1 under the Investment Company Act and in compliance with procedures adopted by the Board pursuant to those rules.
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