It is a Thanksgiving tradition that the Pilgrims and their Native
American dinner guests never could have anticipated. It happens each
year, like clockwork. The holiday dishes are back in the cupboard, the
leftovers are in the fridge, and the shopping bell goes off. The frenzy
is on – with barely four weeks until Christmas. Across the U.S. and
around the world, shoppers set out in search of the perfect gift.
Looking for an innovative gift idea this year? How about Super Bowl tickets, a ride on a private jet, a rare bottle of wine, or a day of golf at an exclusive private club? If you head up a mutual fund you may already have received one of these items, or another luxury gift. Regulators are now saying that these are some of the presents that brokerage firms gifted upon mutual fund executives to thank them for their business.
These revelations are the latest blow to a brokerage industry already reeling from a laundry list of scandals that include rigged research reports, price fixing, mutual fund abuses and as-yet unaddressed issues relating to the under-regulated world of hedge funds. Just in time for the holidays, the securities cops are poised to knock the stuffing out of Wall Street once more. The Securities and Exchange Commission, and the industry’s self-regulatory arm, NASD, reportedly are conducting a “broad-based inquiry” that may involve as many as twenty brokerage firms.
The regulators are concerned that some of those brokerage firms may have given gifts to employees of mutual fund advisors in order to curry favor. Perish the thought.
Those gifts – if they did occur – could violate SEC and NASD rules. NASD places limits on gift-giving, while the SEC requires mutual funds to disclose conflicts of interest, including gifts that might sway their independent judgment. The agencies are concerned that the interest of investors may not have been protected. “The concern is whether the self-interest of gift recipients trumped the best interests of investors, according to SEC spokesman John Nestor.
The SEC is continuing to examine other aspects of the relationship between mutual funds and the brokers who market their shares and provide them with research reports.
Just another Thanksgiving, with plenty of turkeys and some expensive trimmings.
Bernstein Cherney LLP is a boutique New York City law firm with extensive experience in corporate law, civil litigation and real estate matters. The firm counsels its clients on a broad range of business-related and corporate matters, including, securities issues, mergers and acquisitions, broker-dealer regulation, commercial transactions, real estate matters.
Looking for an innovative gift idea this year? How about Super Bowl tickets, a ride on a private jet, a rare bottle of wine, or a day of golf at an exclusive private club? If you head up a mutual fund you may already have received one of these items, or another luxury gift. Regulators are now saying that these are some of the presents that brokerage firms gifted upon mutual fund executives to thank them for their business.
These revelations are the latest blow to a brokerage industry already reeling from a laundry list of scandals that include rigged research reports, price fixing, mutual fund abuses and as-yet unaddressed issues relating to the under-regulated world of hedge funds. Just in time for the holidays, the securities cops are poised to knock the stuffing out of Wall Street once more. The Securities and Exchange Commission, and the industry’s self-regulatory arm, NASD, reportedly are conducting a “broad-based inquiry” that may involve as many as twenty brokerage firms.
The regulators are concerned that some of those brokerage firms may have given gifts to employees of mutual fund advisors in order to curry favor. Perish the thought.
Those gifts – if they did occur – could violate SEC and NASD rules. NASD places limits on gift-giving, while the SEC requires mutual funds to disclose conflicts of interest, including gifts that might sway their independent judgment. The agencies are concerned that the interest of investors may not have been protected. “The concern is whether the self-interest of gift recipients trumped the best interests of investors, according to SEC spokesman John Nestor.
The SEC is continuing to examine other aspects of the relationship between mutual funds and the brokers who market their shares and provide them with research reports.
Just another Thanksgiving, with plenty of turkeys and some expensive trimmings.
Bernstein Cherney LLP is a boutique New York City law firm with extensive experience in corporate law, civil litigation and real estate matters. The firm counsels its clients on a broad range of business-related and corporate matters, including, securities issues, mergers and acquisitions, broker-dealer regulation, commercial transactions, real estate matters.
Nice post Hartley. It is something like old chapter but interesting.
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