WASHINGTON — Bombarded by requests for documents, e-mails and other records from SEC staff, big investment advisers and mutual fund companies might be facing millions of dollars in expenses this year in dozens of "minisweep" examinations.
"When a sweep occurs, you're talking about days or weeks, not minutes," said John Benvenuto, director of mutual fund distribution research at Boston-based Financial Research Corp. "It's a major drain on the resources of the firm."
Several regional offices of the Securities and Exchange Commission as well as the Washington headquarters are zeroing in such issues as soft-dollar arrangements at index funds, personal trading, market timing, performance-based fees, advertising and marketing of performance data, and exchange-traded funds.
"In the last year, (office of compliance examinations and inspections) staff has discovered how wonderful e-mail is, and they haven't always been reasonable in requesting e-mails" for their investigations, said a securities lawyer who is a former SEC official. "If the SEC activity continues at its current levels," these companies will be forced to move resources from other areas to cover the additional costs of collecting and providing data to SEC examiners, said the lawyer, who now advises several large money managers and mutual fund companies on regulatory issues.
No one interviewed for the story could give a dollar estimate of how much the sweeps are likely to cost.