Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Monday, August 4, 2008

SEC Staff Issues ComplianceAlert on Common Deficiencies

On July 22 the SEC staff released a new ComplianceAlert letter identifying common deficiencies and weaknesses that SEC examiners have recently found during compliance examinations of firms registered with the SEC (which includes investment advisers, investment companies, broker-dealers, and transfer agents).  The ComplianceAlert is intended to foster compliance in the securities industry by providing information about deficiencies and encouraging chief compliance officers to take steps to address any similar issues at their firms.  The SEC staff last year issued its first ComplianceAlert letter.

The new ComplianceAlert letter describes examination findings in several areas:

Personal trading by investment advisory employees.
Soft dollar practices by advisers.
Mutual funds' proxy voting practices.
Valuation and liquidity issues for high-yield municipal bond funds.
"Free lunch" sales seminars.
Broker-dealers' valuation and collateral management processes.
Issues identified at broker-dealers affiliated with insurance companies.
Supervision of solicitations for advisory services.
Use of mortgage financing as credit for the purchase of securities.
Broker-dealers' supervisory and compliance controls over offices of supervisory jurisdiction.
Transfer agents' practices regarding "lost securityholders"

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