SEC Charges Eight Mutual Fund Directors for Failure To Properly Oversee Asset Valuation

The SEC announced charges against eight former members of the boards of directors overseeing five Memphis, Tennessee-based mutual funds for violating their asset pricing responsibilities under the Federal securities laws. According to the attached order, the funds, which were invested in some securities backed by subprime mortgages, fraudulently overstated the value of their securities as the housing market was on the brink of financial crisis in 2007. The order further states that the directors' failure to fulfill their fair-value-related obligations was "particularly inexcusable" given that "fair-valued securities made up the majority of the funds' net asset values - in most cases more than 60 percent."

The SEC and other regulators previously charged the funds' managers with fraud, and the firms later agreed to pay $200 million to settle the charges.

See: SEC Order and Press Release (links externally to SEC website).Related News Item: See SEC Director Champ Remarks on Investment Adviser Regulation (Important Speech) (with Lofchie Comment).