SEC Compliance Findings Target Many Weaknesses

The Securities and Exchange Commission’s Office of Compliance Inspections and Examination released a new ComplianceAlert recognizing common flaws and weaknesses among mutual fund companies.

Based on recent examinations, the SEC is trying to assist firms by supplying them with information on their deficiencies.

The SEC found deficiencies in soft-dollar practices, mutual fund proxies, personal trading by investment advisory employees, valuation and liquidity issues for high-yield municipal bond funds, broker/dealers’ valuation of collateral management processes, and a variety of other issues.

"Our June 2007 ComplianceAlert was very well-received by industry compliance and legal professionals," said Lori Richards, director of the SEC's office of compliance inspections and examinations. "Many industry compliance staff told us that, after reading it, they reviewed their firms' practices in the areas we noted and took steps to ensure that their firms' practices were fully compliant. We expect that this second ComplianceAlert will be similarly helpful."