SEC Changes Advisor Ethics Code Rules

Another, more narrowly focused section of an advisor’s code of ethics must require some high-level executives and other key employees, called “access persons,” to report their personal securities holdings and transactions, including transactions in mutual funds advised by the advisor or an affiliate.

The code of ethics will have to require access persons to clear any personal investments in initial public offerings and limited offerings, the SEC says.

The SEC proposed the changes in advisors’ codes of ethics in January. Since then, several parties that submitted comments, including a representative for a U.S. investment advisory affiliate of ING Groep N.V., Amsterdam, have suggested that the changes would cause problems for advisors and that the SEC needed to clarify the term “access person” and other terms used in the original version of the proposal.

In related news, the SEC voted to adopt amendments that will require a mutual fund to give consumers more information about breakpoint discounts on front-end sales loads.