The SEC has agreed in principle with eight former directors of five Morgan Keegan mutual funds to settle a civil enforcement action brought in December 2012. In the December action, the SEC charged the directors with failing to exercise their responsibilities to ensure accurate valuations of the assets in mutual funds, which included holdings in subprime mortgage-backed securities.
A stay in the case is now set to occur to “afford the parties an opportunity to present the settlement offer to the commission for its consideration.”
InvestmentNews reported that “the hearing was widely anticipated throughout the fund industry…because it highlighted the SEC’s recent focus on the role of mutual fund directors in looking out for the interests of fund shareholders…particularly when it comes to making sure a fund’s holdings are properly valued.”
The industry views this hearing, and settlement, as a “wake-up call” that the SEC will not just settle for going after fund directors, but that the SEC will go after boardrooms and professionals that serve the directors, and that the SEC views valuation as a very high priority.
Jason Doss is the owner of The Doss Firm, LLC, an Atlanta-based law firm devoted to representing consumers across the country in a variety of areas including investment disputes and consumer class action litigation. Mr. Doss earned his J.D. from Florida State University in 2002 and his B.A. from the University of Florida in 1997.