A New York-based investment adviser agreed to pay $100,000 to settle allegations levied by the Securities and Exchange Commission (SEC) it failed to adopt and implement written compliance policies and procedures, conduct annual reviews, and establish and enforce a code of ethics.
Mortgage Industry Advisory Corp. (MIAC) also agreed to cease and desist from further violations and a censure in reaching settlement, the SEC announced in an administrative proceeding Monday.
The details: In 2006, MIAC received a notice from the SEC’s Division of Examinations regarding alleged deficiencies in its employee handbook. The guidance was “primarily geared to internal human resources policies” and was not designed to prevent employees from violating federal securities laws, the SEC’s order stated.
The handbook failed to specifically mention the Advisers Act or include code of ethics requirements, the SEC alleged. MIAC responded with a code of ethics it said it would add to the handbook, but it was absent again upon examination in 2008, the agency found.
From at least 2006 until 2022, the firm failed to conduct annual reviews of adequacy or effectiveness of implementation of its compliance program, the SEC alleged. Despite engaging an accounting firm starting in 2001 to annually review the design and operating effectiveness of its internal controls, MIAC did not have the firm review its compliance program, per the order.
After a 2021 examination noted the same deficiencies as in 2006, MIAC implemented new policies and procedures, began conducting annual compliance reviews, and adopted a written code of ethics, the SEC said.
Compliance considerations: In 2022, MIAC hired a new chief compliance officer tasked with improving its compliance program. The firm also retained a third-party compliance consultancy to advise on its overall compliance program and policies and procedures.
MIAC did not respond to a request for comment. The firm reached settlement without admitting or denying the SEC’s findings.