Securities Activities of Banks in the GLB Era - Cleary Gottlieb Steen ...

(i) Conflicts of interest, including (A) disclosure-related
issues (e.g., payments by mutual funds to brokerdealers
and the use of soft dollars), (B) misuse of
customer trading information or other non-public
information, (C) allocation of limited products,
services or opportunities to favored clients or provision
of special incentives or payments for use of products or
services, (D) use of products or services of affiliates or
favored clients, (E) playing multiple roles in a
transaction or with respect to an issuer or client,
(F) biased research and advice, (G) accounting,
booking or reporting to achieve other interests, and (H)
gifts and entertainment to and from clients).
(ii) Sales practices (including suitability, disclosure of
risks, costs and fees, unauthorized trading, churning,
switching, misrepresentation of performance results
and recommending home mortgages to fund securities
purchases), with special emphasis on mutual funds and
variable annuities.
(iii) Trading and pricing practices (including best
execution).
(fn. cont.)
(SEC action against former officers of Putnam Fiduciary Trust Company for
fraudulent activity; SEC announcement that it would not bring any enforcement
action against the Trust Company “because of its swift, extensive and extraordinary
cooperation in the [SEC]’s investigation of the [subject] transactions [including] . . .
prompt self-reporting, an independent internal investigation, sharing the results of
that investigation with the government (including not asserting any applicable
privileges and protections with respect to written materials furnished to the [SEC]
staff), terminating and otherwise disciplining responsible wrongdoers, providing full
restitution to its defrauded clients, paying for the attorneys’ and consultants’ fees of
its defrauded clients, and implementing new controls designed to prevent the
occurrence of fraudulent conduct”).
63