MIAMI -- When assessing the problems plaguing the mutual fund industry, you'll hear plenty of chatter about imposing stiffer penalties and introducing more stringent regulation.

Certainly, these are effective deterrents for bad behavior, but not all fund shops are guilty of conspiring to defraud investors. In fact, at most fund houses impropriety seems to be more of a function of the disconnect that exists between fund boards and compliance departments as opposed to collusion and cover-up. So the question for fund shops has become, "Do we have the proper systems in place to mitigate the risk of being hit with fraud charges?"

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