MPI recently completed its sixth annual Survey of Mutual Fund Chief Compliance Officer Compensation and Organizational Practices. This bulletin summarizes the findings and is based on the submissions of 63 fund CCOs, representing funds with $3.4 trillion in assets.  65% of the participants were full-time employees and serve as CCO to both the fund and the advisor.

     Apart from CCOs at the largest firms, CCO compensation on average appears to be holding relatively steady through the financial crisis, with few CCOs seeing wide variability in their annual pay.  The overall picture was on par with expectations that CCOs would not receive the larger increases seen before the meltdown.  The majority of participating mutual fund CCOs again saw moderate or no increases in total compensation in 2009 when compared to 2008. Based on the 65 participants in the 2010 study (not exactly the same group as in 2009), average total annual CCO compensation rose from $349,266 to $352,034, an increase of less than 1%.

     The role of a mutual fund’s Chief Compliance Officer was partially devised to assist the board in the execution of their duties. Principle among them is to ensure that the Fund complies with the Securities Laws. In many ways the CCO is the eyes and ears of the fund directors. And in return, the fund board has an obligation to guide, monitor and support their CCO.

     The purpose of this article is to describe the ways in which the mutual fund directors can accomplish this. Like any good manual their responsibilities can be summarized with an acronym. For this subject matter it is, “CARE.”

MPI has recently completed its third annual survey of Chief Compliance Officer Compensation and Organizational Practices. This Bulletin is a summary of the findings and is based on the submissions of 64 fund families following 46 which reported last year.

We analyzed the data by plotting the total compensation against assets under management. We found that CCO compensation increased as size increases but that economies of scale exist (i.e. a CCO is paid more for the first $1 billion of assets than the second $ billion and so on). We found that the highest paid CCOs approach $1 million per year and very few are paid less than $150,000. When we compared the same CCOs year over year we found an average pay increase of 9%.

During 2007 MPI completed its second annual survey of Chief Compliance Officer Compensation and Organizational Practices. This Bulletin discusses some of the findings with regard to the career path of the CCO.  The overwhelming finding is that the CCO is rapidly becoming a profession in itself, with advancement opportunities coming in the form of larger compliance roles, such as Global Head of Compliance, or as CCO at a larger fund complex.

We found that CCOs can be divided into three categories: (1) contract CCOs -- essentially either freelance individuals or employees of corporations specifically set up to provide compliance services, (2) professional CCOs who are on the advisor and/or board’s payroll but have no intent of rejoining the line operation of their companies, and (3) career company employees who are currently, and perhaps temporarily, serving as CCO.

Over the past several months, MPI has completed its second annual survey of Chief Compliance Officer Compensation and Organizational Practices. This bulletin is a summary of the findings about compensation and is based on the submissions of 46 fund CCOs.

The purpose of this article is to share an approach to evaluate the effectiveness of third party service provider operations and compliance programs. The law and the supporting regulations state that a Fund Board must take responsibility for the policies and procedures of each of its service providers. These usually include any sub-adviser, transfer agent, custodian, fund accountant or pricing service. In turn the Board looks to the Chief Compliance Officer (CCO), who provides the board with an annual written report about each of its service providers.

The report must address, at a minimum: (1) the operation of policies and procedures of the fund and each service provider since the last report, (2) any material changes to the policies and procedures since the last report, (3) any recommendations for material changes to the policies and procedures as a result of the annual review, and (4) any material compliance matters since the date of the last report.