The SEC has released a new 'ComplianceAlert' letter identifying common deficiencies and weaknesses that SEC examiners have found during recent compliance examinations of registered investment companies and broker-dealers.
The alert finds weakness in several areas including; personal trading by investment advisory employees, incomplete code of ethics, soft dollar practices, "Free lunch" sales seminars, broker-dealers' issues, supervision, and use of mortgage financing as credit for the purchase of securities among others.
"Our June 2007 ComplianceAlert was very well-received by industry compliance and legal professionals," said Lori Richards, Director of the SEC's Office of Compliance Inspections and Examinations. "Many industry compliance staff told us that, after reading it, they reviewed their firms' practices in the areas we noted and took steps to ensure that their firms' practices were fully compliant. By highlighting our recent examination findings in this way, we expect that this second ComplianceAlert will be similarly helpful to industry firms that are seeking to be proactive in addressing compliance risks."