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IM Director Norm Champ Provides Overview of the Asset Management Industry

Director of the SEC’s Division of Investment Management Norm Champ, kicked off the FSOC’s recent conference with an overview of the asset management industry.  Mr. Champ emphasized that, unlike other participants in the financial services industry, asset managers act as agents for investors following prescribed investment mandates and not trading for their own accounts.  He reminded participants that investors assume investment risk and are not promised a return of capital. 

Mr. Champ noted the diversity of the industry – in assets under management, client base, services provided, strategies pursued, types of products and accounts, and potential risks.  He described the three main types of products in the asset management industry, including mutual funds, private funds, and separate accounts, discussing in detail the extensive regulatory regime applicable to mutual funds.

He detailed the ways that the SEC collects information about asset managers, including publicly available sources of information as well as information that is confidentially filed with regulators.  In addition, he noted that the SEC staff also collects information during examinations.  Finally, Mr. Champ discussed the routine use of third party service providers in the asset management industry.  He emphasized the significance of the almost universal use of third party custodians that would prevent loss of assets in the event of a wind down in the absence of fraud.