The SEC completed a two-year investigation of investment consultants after determining that the firms with the most conflicts of interest regarding advice to pension funds were doing a much better job of identifying, disclosing and managing the problems. The "small number" of firms among the 24 initially inspected "that needed the most improvement" underwent a follow-up exam, Lori A. Richards, director of the SEC's Office of Compliance Inspections and Examinations, confirmed in a telephone interview. In the future, she said, "it is my hope that you would see the marketplace step up to demand unbiased and uncompromised advice, and see consultants provide unbiased and uncompromised advice."
Now, the agency has begun examining the proxy-voting policies and procedures of mutual funds and their investment advisers. It has asked one unidentified mutual fund company for information on its proxy-voting practices, including copies of policies and procedures, and identification of individuals within the organization responsible for voting proxies, according to a Nov. 21 letter from Daniel Wong, chief of examinations in the SEC's Boston office, that a source provided to Pensions & Investments. The company must supply the information by Jan. 6.
This is the first time the SEC has examined mutual fund proxy voting since it adopted a rule on Jan. 31, 2003, requiring mutual fund companies and their investment advisers to disclose their votes and their policies and procedures for voting proxies on stocks they hold in their portfolios.