Fresh off a recent sweep exam, the
The SEC's Office of Compliance Inspections and Examinations indicated in its "
In addition, SEC officials said, the report revealed that a majority of the pension consultants have affiliated broker-dealers or relationships with unaffiliated broker-dealers, which may provide a mechanism for money managers to compensate pension consultants, perhaps as a way to curry favor with them.
Many pension consultants have affiliates that also provide services to pension plan clients, officials said, and many pension consultants do not adequately disclose material conflicts of interest arising from these practices to their clients.
As a result of these situations, the SEC concluded, some pension consultants appear to erroneously think that they are not fiduciaries to their clients.
"It's clear from our examinations that many pension consultants must do more to identify conflicts of interest in their activities, and to take steps to mitigate or eliminate those conflicts," said Lori Richards, director, Office of Compliance Inspections and Examinations, SEC.
The report, officials said, was designed to alert the pension consultant community to the SEC's findings and to urge them to closely examine their disclosure efforts and make improvements where necessary. The SEC did not identify which pension consultants were included in the sweep exam.