More On Legal & Compliancefrom The Advisor's Professional Library
- Where Are We Headed? The ultimate compliance goal is to help ensure that everyone associated with an advisory firm acts ethically at all times. Advisors and RIAs should do the right thing, even when regulators are not looking over their shoulders.
- Nothing but the Best Execution Along with the many other fiduciary obligations owed by RIAs, firms owe a duty to seek best execution of clients transactions. If they fail to do, RIAs violate Section 206 of the Investment Advisers Act.
The Securities and Exchange Commission's Division of Enforcement has established an Asset Management Unit to focus on mutual funds, private funds and investment advisors, the division's director Robert Khuzami said Wednesday in a prepared statement before the Senate Committee on the Judiciary. Khuzami was testifying about the agency's enforcement initiatives.
"Our Asset Management Unit, focused on mutual funds, private funds and investment advisors, has developed several initiatives targeting disclosure, performance and valuation by funds and their advisors," Khuzami said. He cited the unit's Bond Fund Initiative, which focuses on disclosure and valuation issues in mutual fund bond portfolios in collaboration with other divisions and offices within the SEC.
He said the unit has also developed a Problem Advisor Initiative. This is "a risk-based approach to detecting problem investment advisors through on-going due diligence reviews of advisors' representations to investors related to their education, experience and past performance."
In addition, the Asset Management Unit has set up a Mutual Fund Fee Initiative, which will develop analytics for inquiries into the extent to which mutual fund advisors charge retail investors excessive fees. "These analytics are expected to result in examinations and investigations of investment advisors and their boards of directors concerning duties under the Investment Company Act," Khuzami testified.