The SEC is looking into how fund companies process money earmarked for closed funds, said Cindy Fornelli, an advisor to Paul Roye, director of the SEC's division of investment management.

"We're aware that different firms that have a process for handling money do it in different ways and we're exploring what different fund groups do," she said.

The SEC is investigating whether companies placing checks earmarked for a closed fund in a money market fund, fully disclose that practice and whether the fund advertises its closed funds, she said.

Fornelli declined comment on how many or what funds were being investigated.

The SEC recently contacted Janus Capital Management of Denver seeking a clarification of its policy, said Shelley Grice, a spokesperson for Janus. Janus started placing checks designated for closed funds in money market accounts March 16. The company contacts investors by phone and mail to offer a similar fund to those who have sent money for a closed fund. The company has advertised closed funds' performance in the past, Grice said.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.