A recent SEC enforcement action against Western Asset Management Company (WAMCO) highlights the risks of trade allocation misconduct and underscores the need for firms to establish strong policies to prevent such issues. In an article for Corporate Compliance Insights, Howard Scheck and Chris Hoyle share risk mitigation tips, including:
- Fiduciary Duty: Ensuring all clients receive fair treatment in trade allocations.
- Preventing Conflicts of Interest: Implementing safeguards to eliminate favoritism or self-dealing.
- Regulatory Compliance: Aligning practices with SEC guidelines to maintain transparency and accountability.
To build an effective trade allocation framework, firms should establish clear allocation criteria, segregate duties to prevent conflicts, enforce robust approval processes, maintain thorough documentation, and conduct regular compliance reviews. As regulatory expectations evolve, continuous assessment and refinement of these policies are essential to protecting both investors and firms from potential pitfalls.
If you have any questions or would like to discuss these topics please reach out to Chris Hoyle or Howard Scheck.
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