With the ever changing regulatory landscape and the increased market volatility of the mutual fund industry over the past 10 years, including the implementation of Sarbanes-Oxley and Rule 38a-1 requirements on registered mutual funds, it may be time to reevaluate the role of the Chief Financial Officer (CFO) for mutual funds.
The Historical Role of the Mutual Fund CFO
Since inception, the mutual fund business model has successfully relied upon "outsourcing" wherein all of the functions and services required of a fund are typically contracted ("hired out") to professional organizations. Thus, there are no true "employees" of a mutual fund. Prior to the passage of Sarbanes-Oxley Act of 2002 (SOX), the CFO function had typically been performed by an employee of the fund's investment advisor or the fund's accounting agent and had been functional in nature. In this environment, there was minimal personal or corporate liability for the CFO.
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