Briefs: SEC may still miss mutual fund abuses, GAO says.(Special Report: Mutual Funds)

Pensions & Investments, May, 2005

WASHINGTON - The SEC may again fail to detect trading abuses by mutual fund companies unless it develops a plan to routinely receive and review annual compliance reports from chief compliance officers at mutual fund companies, according to a GAO report released April 22. Mutual fund compliance staff had detected evidence of market timing and other arrangements with favored clients long before the SEC became aware of the trading abuses, but they lacked independence from their companies to correct the problems, the Government Accountability Office noted.

And although a new SEC rule requires all mutual fund companies to have chief compliance officers who report directly to the mutual fund board of directors, organizational conflicts of interest may still exist if...

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