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ARTICLE · 14 JULY 2011

Investment Management Update: July 2011

Ropes & Gray LLP
Ropes & Gray LLP
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Ropes & Gray LLP

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On June 22, 2011, the Securities and Exchange Commission ("SEC"), state regulators and the Financial Industry Regulatory Authority ("FINRA") announced that a registered investment adviser and its broker-dealer affiliate, plus two employees.

United StatesFinance and Banking
Ropes & Gray LLP'S Investment Management Practice Group
Ropes & Gray LLP'S Investment Management Practice Group
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Firm Agrees To Pay $200 Million To Settle Allegations Involving The Valuation Of Mortgage-Backed Securities

On June 22, 2011, the Securities and Exchange Commission ("SEC"), state regulators and the Financial Industry Regulatory Authority ("FINRA") announced that a registered investment adviser and its broker-dealer affiliate, plus two employees (collectively, the "respondents"), settled charges stemming from the valuation of mortgage-backed securities held by several registered open- and closed-end funds in 2007. The SEC order can be found here and the FINRA letter of acceptance, waiver and consent can be found here.

According to the settlement, the respondents failed to adhere to board-approved valuation policies and procedures when fair valuing mortgage-backed securities and the broker-dealer used inaccurate sales literature when marketing one of the open-end funds. The adviser and its affiliated broker-dealer agreed to pay $200 million for the benefit of

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