Question One

Over the last few months, the Securities and Exchange Commission (SEC) has cracked the whip at the Investment industry in a bid to restore sanity in the industry. In November 2019, the Ideal Capital Partners and Blackshield Capital Management (formerly Gold Coast Fund Management) were liquidated for failing to return clients money which remain locked up. The operations of Unisecurities Limited, FirstBanc Financial Services Ltd, Beige Investment, Heritage Securities Limited, and All Time Capital among others ended. In all, 53 fund management companies had their licenses withdrawn by the SEC.

The SECs statement on closure of the institutions said they have failed to perform their functions efficiently, honestly and fairly and in some cases are in continuing breach of the requirements under relevant securities laws, rules or conditions. Other issues raised were the liquidity challenge from counterparty transactions due to the collapse of some banks weak corporate governance which compelled SEC to crack the whip.

Required

As a manager of a fund management that was not closed down, what measures will you put in place to ensure that your institution will not be caught in the situation of the collapsed fund managers.