Clients will no doubt have seen the $20m sanction the SEC imposed on a major asset manager late last year related to their pricing of odd-lot bond positions.
Voltaire Advisors has reviewed this issue extensively with other funds, lawyers, administrators, vendors and the Commission itself. These discussions have allowed us to formulate a clear picture of what mutual funds need to do to comply with the changes to valuation policies and procedures that the order implies and protect themselves against similar sanctions. Importantly, we also gained clarity on what behavior relating to odd-lot bond investment strategy is not seen as breaking the rules - something that the order does not address.
As you may know, it is quite probable that the SEC will conduct a 'sweep' of fixed income funds in the coming months to look at the odd-lot bond issue, and we are recommending that funds act on this as soon as possible.
To help with assessing options, we ran a webinar on the issue on February 16th. Presented by Ian Blance, Managing Director of Voltaire Advisors, the webinar covered:
Ian Blance is Managing Director of Voltaire Advisors. Ian has over 25 years’ experience in the financial markets focused on research and valuation of securities and derivatives. He is a regular commentator on valuation and risk issues in the media and a frequent conference speaker. In his earlier career Ian developed and ran securities valuation operations for two of the five major information vendors and has provided consulting services for the others. Ian spent 4 years as Head of Evaluated Pricing for SIX Financial Information, based in Zürich, Switzerland and 12 years with Interactive Data Corporation, setting up and building their fixed income valuations business in London and subsequently becoming Managing Director of the market leading Evaluated Pricing unit in New York. Before Interactive Data, Ian was an economist and senior bond strategist in investment banking.