Regulatory Focus On Bond Valuation Should Not Be Ignored
By Joshua Newville, Robert Plaze and Michael MavridesJune 14, 2017, 12:00 PM EDT
Law360, New York (June 14, 2017, 12:00 PM EDT) -- According to recent news reports, the U.S. Department of Justice and the U.S. Securities and Exchange Commission are investigating the possible improper use of third-party broker quotes by fund managers to value illiquid debt securities in their portfolios. Prosecutors are reportedly focused on possible instances where fund managers allegedly solicited predetermined or improper quotes from brokers, and used those estimates to inflate their own valuations of thinly traded mortgage bonds.
In addition, the co-head of the SEC’s Asset Management Unit recently highlighted that unit’s focus on...