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SEC Issues New "ComplianceAlert"

Last week, the SEC released its second “ComplianceAlert,” discussing recent exam priorities and summarizing some of the Commission’s key findings and observations. Last year, the Commission put out a similar Alert for the first time, and – observing that the first Alert was well-received – appears poised to make this a regular communication.

The 2008 Alert describes findings for both investment advisors (with a heavy focus on institutional asset managers and mutual funds, rather than retail advisors) and broker-dealers, with a brief nod to transfer agents. The Commission’s observations contain both bad (lunch seminars and mortgage-financed securities purchases) and good (soft dollar compliance). The specific findings are not terribly surprising, but the Alert paints a good picture of the SEC’s recent areas of concern and its current views on those topics.

For investment advisors/mutual funds, the Alert describes: (1) personal trading compliance; (2) proxy voting/use of proxy voting services; (3) valuation and liquidity for high yield municipal bond funds; and (4) soft dollar practices. For broker-dealers, the Alert addresses: (1) “free lunch” sales seminars; (2) valuation and collateral management related to subprime mortgage products; (3) sales issues related to B-Ds affiliated with insurance companies; (4) solicitation by B-Ds of advisory services; (5) mortgage financing of securities puchases; and (6) OSJ supervisory structure and procedures.

The entire seventeen-page report is worth a read, but here are a couple of brief documents that summarize in bullet form some of the Alert’s key observations, for both investment advisors/mutual funds and for broker-dealers.

Full post as published by OverRegd - Securities Regulation and Litigation Blog on July 31, 2008 (boomark / email).