PERAC Memo #39 - 2007: SEC/Callan Associates
SEC/Callan Associates
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PERAC Memorandum #39/2007 informs retirement boards of an SEC enforcement action against Callan Associates for failing to disclose that it received payments from BNY Brokerage Inc. contingent on client-generated commissions—a conflict of interest not reflected in Callan's public disclosures. Boards are directed to review this SEC action and determine whether their own investment consultant maintains any similar "preferred broker" arrangement, and if so, to assess the potential impact on the board's portfolio.
Full Text
MEMORANDUM #39, 2007 M E M O R A N D U M TO: All Retirement Boards FROM: Joseph E. Connarton, Executive Director RE: SEC/Callan Associates DATE: October 12, 2007 Recently, the Securities and Exchange Commission (SEC) took action against Callan Associates. Enclosed please find a copy of the SEC Order. The SEC’s proceeding related to violations of the federal securities laws in failing to disclose a conflict and thereby filing misleading public disclosures. Callan disclosed that it had a contractual relationship with BNY Brokerage Inc. (BNY), it failed to disclose that it was receiving annual payments from BNY that were contingent on Callan clients generating a certain level of commission for BNY. Please review the SEC action carefully and determine whether or not the consultant, if any, employed by your Board has any similar “preferred broker” relationships. In the event that such relationships may exist the Board should assess its impact on the Board’s portfolio. I hope this is helpful to you and if you have any further questions or comments please contact me. Enclosure