Dually-registered advisers on SEC focus list

Regulator also will focus examinations on payments that advisers and funds make to companies that distribute private equity and hedge funds

Feb 24, 2013 @ 12:01 am

By Mark Schoeff Jr.

Investment advisers to private-equity and hedge funds, and those who are dually registered as broker-dealers, will be targeted by Securities and Exchange Commission examiners this year.

The SEC also will focus examinations on payments that advisers and funds make to companies that distribute the funds, and will explore the use of alternative and hedge funds in exchange-traded funds and variable annuities. The review priorities were posted on the SEC website last Thursday.


For broker-dealers, among the areas the SEC will target are fraudulent sales practices used with retail investors and compliance with the agency's new market access rule.

The agency is putting an emphasis on reviewing investment advisers who are dually registered as brokers because of the convergence of the two practices. The agency is concerned that investors could be harmed as the lines between the two blur.

The SEC also is keeping an eye on payments that advisers and fund companies make for fund distribution, a practice that is labeled in the report as “payments for distribution in guise.”

The SEC is providing the guidance on examinations so that advisers are not caught by surprise.


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