Massachusetts’ Galvin investigates fund pricing glitches

Massachusetts' top securities cop is investigating the failure of an accounting platform he said delayed correct pricing for billions of dollars in mutual funds and ETFs.

Massachusetts’ top securities cop is investigating the failure of an accounting platform that he said has delayed correct pricing for billions of dollars in mutual funds and ETFs.

Secretary of the Commonwealth William F. Galvin on Friday said his office had sent letters to the Bank of New York Mellon Corp., a third-party service provider to fund companies, and six top asset managers “to address concerns that individual investors may have suffered losses” if they were unable to trade funds “at accurate prices.”

A fund-accounting platform used by BNY Mellon collapsed following operating-system maintenance on Aug. 22, according to the platform developer, SunGard Data Systems Inc. The errors have delayed accurate accounting of the value of billions of dollars funds issued by at least 46 fund companies, the regulator said.

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The state regulator asked for information from asset-management units of the Goldman Sachs Group Inc., Deutsche Bank AG, First Trust Portfolios, Guggenheim Partners, Prudential Financial Inc. and Federated Investors Inc.

The delays and mispricing forced BNY Mellon and SunGard to work around the clock to deliver accurate pricing to its clients. They’ve also been an enormous embarrassment for the mutual fund and exchange-traded fund industries, casting a spotlight on the accounting, technology and other so-called back-office operations that support an industry responsible for $33 trillion in savings globally.

“In the warp-speed of trading these days computer problems can happen, but the fallout that seems only to affect large financial institutions can hit the average investor looking at his and her retirement money,” Mr. Galvin said in a statement.

Spokesmen for SunGard, Goldman Sachs and Guggenheim declined to comment, as did spokeswomen for Deutsche Bank and Prudential. BNY Mellon and the two other fund-management firms didn’t immediately respond to a request for comment.