More On Legal & Compliancefrom The Advisor's Professional Library
- 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.
- Agency and Principal Transactions In passing Section 206(3) of the Investment Advisers Act, Congress recognized that principal and agency transactions can be harmful to clients. Such transactions create the opportunity for RIAs to engage in self-dealing.
The former chief executive of Freddie Mac may face a civil action as the government ramps up an investigation of disclosure practices at the mortgage finance giant and its sister company, Fannie Mae, The New York Times reported Wednesday, citing people briefed on the investigation.
The executive, Richard Syron, a former president of the American Stock Exchange and now an adjunct professor and trustee at Boston College, has received a so-called Wells notice from the Securities and Exchange Commission, an indication the agency is considering an enforcement action against him.
According to the paper, Syron, who has not been accused of any wrongdoing, is the latest executive mentioned in the government's sweeping examination of the two government-controlled companies. Three others have already been sent Wells notices, and at least two others are thought to have received them, the people briefed on the investigation said. Last week, Daniel Mudd, the former chief executive of Fannie Mae, received a Wells notice, and another former Fannie executive is expected to receive one as well, these people said.
The SEC's long-running investigation is now zeroing in on how Freddie and Fannie publicly disclosed their exposure to risky loans and whether those depictions were too rosy, according to the people briefed on the investigation who spoke on the condition of anonymity because the inquiry is not complete. Although the companies offered detailed snapshots of their mortgage portfolios, the SEC is exploring whether they underreported their ownership of subprime loans and mortgages that required few documents from borrowers.
The government continues to examine the potential culpability of people and agencies involved in the mortgage mess and the subsequent financial crisis, The Times says.