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After High-Yield Issues, SEC Launched Sweep

The decision to liquidate a high-yield bond fund by Third Avenue Management last month prompted the SEC to quickly launch a sweep of high-yield bond funds, according to Reuters. The article reports that the SEC’s request included how funds price less liquid securities, whether those prices have been challenged by certain parties, and daily internal liquidity calculations for August 31 to December 15. Additionally, regulators requested “a list of large fund shareholders, daily inflow and outflow data and any disclosures concerning ‘liquidity, quality of portfolio composition and/or redemption activity for each fund.’”

BoardIQ reported that the letters queried whether any directors had resigned or were terminated in the past six months, and if so, a reason for their departure. According to BoardIQ, the letter also requested all 2015 board meeting materials, the most recent annual self-assessment and all meeting minutes. Reuters reported that the SEC set a 24 hour deadline on half of the items requested and a week deadline to submit the other items. 

 
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