So found Securities and Exchange Commission (SEC) investigators in a little-noticed alert sent out to compliance officers in July.
Global Proxy Watch reports that critics have long accused the mutual fund industry of a full array of conflicts and sloppy practices that disadvantage its investors. The SEC has begun to take action, although it’s using quiet diplomacy to do so. It named none of the transgressors, for instance. But the probe uncovered a wide range of problems.
Some firms had deficient controls covering personal trading by staff, including incomplete ethics codes, and codes and monitoring requirements that weren’t followed.
Surprisingly, according to GPW, the SEC concluded that funds generally have adequate procedures to police conflicts between their business interest and those of their clients and shareowners.
Expect the Conference Fund of Leaders, the new body representing mutual fund board chairs and lead directors,, to take up the issue at its kick-off meeting on October 27 in New York.