Published on Oct 26th, 2021 |


Observations from Examinations in the Registered Investment Company Initiatives
October 26, 2021


  • Focus:
    • The SEC examined more than 50 fund complexes, more than 200 funds and/or series of funds, and nearly 100 advisers with a focus on practices and compliance in areas that may have an impact on retail investors.
  • Observations:
    • Compliance Program:
      • The SEC noted funds and their advisers did not establish, maintain, update, follow and/or appropriately tailor their compliance programs to address various business practices.
      • This includes the following below:
        • Portfolio management;
        • Valuation;
        • Trading;
        • Conflicts of interest;
        • Fees and expenses; and
      • Board Oversight of Compliance Programs:
        • Deficiencies found in the following areas:
          • Monitoring and reporting with accurate information;
          • Providing appropriate processes as part of the respective fund board’s annual review and approval of the fund’s investment advisory agreement;
          • Completing required annual reviews of the funds’ compliance programs;
          • Ensuring that the annual report for the respective funds’ chief compliance officer addressed the operation of the policies and procedures of the funds’ adviser; and
          • Adopting and maintaining appropriate policies and procedures for the funds’ board to exercise appropriate oversight.
        • Disclosure to Investors:
          • The examination found that funds had inaccurate, incomplete and/or omitted disclosures in their filings, and inaccurate, incomplete, and/or omitted disclosures on a variety of advertising and sales literature-related topics.
  • Recommendations for:
    • Compliance Programs:
      • Review compliance policies and procedures for consistency with practices;
      • Conduct periodic testing and reviews for compliance with disclosures;
      • Assess the effectiveness of compliance policies and procedures in addressing conflicts of interests; ad
      • Ensure compliance programs address the oversight of key vendors.
    • Funds’ Board Oversight:
      • Assess whether information provided to the board is accurate; and
      • Assess if the funds were adhering to their processes for board reporting.
    • Disclosures:
      • Review and amend disclosures in funds’ prospectuses, SAIs, shareholder reports and/or other investor communications consistent with the funds’ investments and investment policies and restrictions;
      • Update fund websites disclosures concurrently with new or amended disclosures in fund prospectuses, SAIs, shareholder reports or other client communications;
      • Review and testing of fees and expenses disclosed in fund prospectuses, SAIs, shareholder reports or other client communications for accuracy and completeness of presentation; and
      • Review and testing of funds’ performance advertising for accuracy and appropriateness of presentation and applicable disclosures.


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