WASHINGTON — The SEC has completed a two-year investigation of investment consultants.
The agency determined that the firms found with the most conflicts of interest on advice to pension funds were doing a much better job of identifying, disclosing and managing the problems.
The Securities and Exchange Commission still could take legal action against consultants that continue to have blatant conflicts of interest, such as recommending money managers and brokerage firms that pay the consultants to steer business their way.
And while the consultant investigation has ended, the SEC has begun examining the proxy-voting policies and procedures of mutual funds and their investment advisers.
In the consultants' investigation, the "small number" of firms "that needed the most improvement" of the 24 initially inspected underwent a follow-up exam, Lori A. Richards, director of the SEC's Office of Compliance Inspections and Examinations, said in a telephone interview Dec. 7.
In a speech on Dec. 5 in San Francisco, Ms. Richards said: "We're seeing indications of positive responses from pension consultants when it comes to identifying, disclosing or curtailing conflicts of interest in the advice that they provide to pension plan sponsors."
In her speech, Ms. Richards reiterated the findings of the initial examination: that the advice consultants gave often was self-serving and not in the best interest of their clients.
In the future, Ms. Richards said in the interview, "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."
Ms. Richards said the SEC is publicizing the findings to let the more than 1,800 investment consultants know what steps others have taken to isolate and manage their conflicts of interest.
Ms. Richards declined to say whether the SEC was contemplating legal action against consulting firms that continue to violate their fiduciary duty to provide unbiased advice to their clients.