Gifts and Entertainment: SEC Reminds Advisors of the Rules


From the update issued by the SEC, "In furtherance of the Division’s mission to protect investors, the staff periodically issues guidance updates that highlight particular situations that might give rise to conflicts of interest. In this guidance update, the staff is highlighting the conflict of interest that arises when the personnel of a fund’s investment adviser are presented with gifts, favors or other forms of consideration (gifts or entertainment) from persons doing business, or hoping to do business, with the fund. It is not uncommon for the codes of ethics of investment advisers under the Investment Advisers Act of 1940 (the “Advisers Act”) and funds under the Investment Company Act of 1940 (the “1940 Act”) expressly to address this particular conflict of interest."

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