Final Installment in Donohue’s Conflicts of Interest Series

In the final installment of MFDF Chair Buddy Donohue’s conflicts of interest series, fund officer and director conflicts are addressed as well as those of certain service providers.  Funds do not have their own personnel, and third-party service providers are relied upon for staffing and operations.  Often, fund officers and directors may have other roles within an organization that present conflicts.  Donohue notes the responsibilities that fund officers and directors have under state law as well as the federal securities laws, including the 1940 Act, which can help to guide the management of potential conflicts relating to financial interests, personal interests, conflicting obligations or family interests.  He provides numerous examples of potential conflicts that officers and directors may face, as well as considerations that fund directors can review as they address such conflicts.  Donohue also reviews specific fund administrator and transfer agent conflict examples, and the extent to which the fund boards were informed about these facts and circumstances.  Adopting a process to thoroughly identify and resolve conflicts can help to avoid harm to funds, fund investors and the broader financial markets.

Click here to read Buddy Donohue’s Fund Board Views article about conflicts of interest relating to fund officers and directors and service providers.