Conflicts emerge in small fund operations, says SEC (BoardIQ)

A recent case brought by the SEC reveals how easily conflicts of interest can exist when responsibilities for a fund’s operation are not adequately divided or managed. The SEC found that Upright Financial, where several small mutual funds are managed by one individual, had repeatedly miscalculated NAVs and failed to operate a fund as a diversified product. FrontLine’s Founder and President Amy Lynch comments that in this case, one person running a mutual fund complex by handling investments, as well as compliance, reporting and back office activities, would present many conflicts of interest. Especially egregious were failures by the firm to update fund holdings on a daily basis, Ms. Lynch added. See BoardIQ (free trial then subscription required), “A Fund Manager of 2 Worlds Finds Trouble in 1 of Them”