More On Legal & Compliancefrom The Advisor's Professional Library
- Code of Ethics Rule The Code of Ethics Rule, found in Rule 204A-1, uses severe consequences for violation to help ensure investment advisors will do the right thing.
- Books and Records Rule Thorough and complete books and records enable RIAs to demonstrate that they have fulfilled their fiduciary obligations to clients and complied with applicable rules and regulations.
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.