SEC’s Office of Compliance Inspections and Examinations Issues Risk Alert Announcing Examination Initiatives Focused on Registered Investment Companies

November 15, 2018

On November 8, 2018, the staff of the SEC’s Office of Compliance Inspections and Examinations issued a Risk Alert indicating that it is conducting a series of examination initiatives focused on matters relevant to certain mutual funds and exchange-traded funds (ETFs).

The Risk Alert states that examinations will focus on funds and/or advisers that fall into one or more of the following categories: (1) index funds that track custom-built indexes; (2) smaller ETFs and/or ETFs with little secondary market trading volume; (3) funds with aberrational underperformance relative to their peer groups; (4) mutual funds with higher allocations to certain securitized assets; (5) advisers who provide advice to both mutual funds and private funds that have similar strategies and/or are managed by the same portfolio managers; and (6) advisers relatively new to managing mutual funds.

Seward & Kissel LLP recently has prepared a memorandum “SEC’s Office of Compliance Inspections and Examinations Issues Risk Alert to Provide Information on Risk-Based Examination Initiatives Focused on Registered Investment Companies” that discusses the Risk Alert in greater detail.


Categories

Compliance, Enforcement Actions, Exchange-Traded Funds (ETFs), Investment Advisers, Investment Companies, Mutual Funds, Regulatory