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News February 14, 2005 Issue

IM Insight as a Compliance Resource (A Letter from the Publisher)

Occasionally I am asked whether a subscription to a compliance newsletter such as IM Insight can be offered to the SEC as evidence of a firmís culture of compliance.

Given the SECís emphasis on CCO knowledge and competence, it would seem reasonable to assume that they would look at a compliance newsletter subscription favorably, the same way they might view attendance at compliance conferences, membership with the Investment Counsel Association of America or the National Society of Compliance Professionals, and other expenditures that demonstrate that the firm is willing to devote resources towards compliance education. Moreover, Iíve recently heard that an SEC examiner did, in fact, ask a CCO: "What do you read?"

Having said that, hereís a simple tip for IM Insight subscribers to maximize the value of the newsletter as a compliance resource: put a routing slip on each paper copy of IM Insight you receive and send it around to people in your firm that stand to benefit from reading it. The Texas CCO mentioned elsewhere in this issue told me he does that and saves the routing slips, with each personís name checked off, as evidence to give to SEC examiners.

A few words of caution: While you are free to route the original paper copy around your firm, you may not routinely photocopy the newsletter to pass along. Nor may you routinely share the electronic version of the issue with your colleagues (thatís why firms buy multi-user site licenses). Keep in mind that this doesnít just apply to IM Insight ó many periodical publishers take the view that routine photocopying or routine forwarding of electronic versions is a no-no.

If an particular article jumps out at you, can you photocopy it or cut and paste it into an e-mail and send it to a colleague, perhaps to say "See? I told you! Now do you believe me?" Absolutely. The Connecticut CCO in the resources article told me she recently did just that, to illustrate that her firmís policy in a particular area was not overly conservative but was actually in line with what other firms are doing. As long as that sort of thing is done on a one-off basis, thatís fine.

In any event, if you have questions about use, feel free to call me at (301) 896-0100. And, as always, if youíd like to see a particular compliance topic covered in IM Insight or have a question about something youíve read, just give me a call.

- Cathie Saadeh