Compliance should have caught valuation and trading violations (FundFire)

SEC charges against a large money manager would have been prevented by more watchful and proactive compliance at the firm. A subsidiary of Macquarie Asset Management recently settled charges with the SEC centered on overvaluing certain CMO assets and illegal cross trading activity, agreeing to a $79.8 million fine. In exclusive comments, Amy Lynch, FrontLine’s Founder and President, states that the volume of trading and duration of the activity led to an enforcement case – one that could have been avoided with typical compliance monitoring. She explains that the number of cross trades or mismatched pricing would usually be on the radar at such a sizable firm and it points to the failure of the firm’s compliance to adequately review the transactional activity. Ms. Lynch sees the case putting money managers on high alert, especially those that deal in CMOs. See FundFire (subscription required), “Macquarie Unit Settles Valuation, Cross Trading-Related SEC Charges”