SEC Charges Portfolio Managers For Utah Muni Bond Fund

January 9, 2011

According to a SEC press release, the SEC charged two portfolio manages for charging undisclosed “monitoring fees.”

[The managers] began charging municipal bond issuers “credit monitoring fees” in 2003 on certain private placement and non-rated bond offerings without informing Aquila management or the TFFU’s board of trustees. The fees, which ranged between 0.5 and 1 percent of each bond’s par value, were a one-time fee purportedly to compensate Young and Albright for performing additional ongoing credit monitoring that they contend was required because the bonds were not rated. . .T he SEC found that, in fact, any credit monitoring work that [the managers] performed was already part of their regular job responsibilities.

This is an example of fund managers taking advantage of a government entity. To avoid this  Government agencies need  make sure that fund managers (and vendors in general) fully disclose and describe how the fees break down.   See the full story here.


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