Whether investment consultants inform clients of status changes with their money managers may well depend on the consultants’ policies or the specific reasons for removal. The consensus is that informing clients of manager line-up changes is a best practice to maintain good relationships. However, there are compliance considerations on the timing of the manager removal and related communications to clients. According to Founder and President Amy Lynch, if a manager is terminated from a consultant’s…
A recent SEC settlement with affiliates of a large insurance and asset management firm highlights how an employee, charged with criminal offenses outside the office, can negatively impact their employer during an SEC investigation. During its review of faulty research models relied on by certain investment products offered, the SEC cited the models’ numerous errors as directly related to their development by an inexperienced quantitative analyst and portfolio manager, who it turns out, was previously…
A recent SEC order highlighted the regulator’s stance on hypothetical backtested data used in marketing materials. The SEC cited a large fund manager for failures to include adequate disclosures, misrepresentations and lack of compliance coordination as related to backtested performance data used in certain marketing pieces. Founder and President Amy Lynch commented that the use of backtested data remains a very gray area in the eyes of the SEC with internal firm communication breakdowns often…
