Products December 1, 2010

CFA Offers Guide for Endowments and Charities

Working with industry experts, the CFA Institute has published an investment guide for charitable organizations, donors, and beneficiaries.
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The Investment Management Code of Conduct for Endowments, Foundations, and Charitable Organizations contains specific investment management standards that are supplemented by best practice guidance and examples, according to a press release.   

It requires members of a governing body to:  

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  • Act with loyalty and proper purpose; 
  • Act with skill, competence, prudence, and reasonable care; 
  • Abide by all laws, rules, regulations, and founding documents; 
  • Show respect for all stakeholders; and 
  • Review investment strategy and practices regularly. 

In developing the Endowment Code, CFA Institute partnered with industry groups such as the Council on Foundations, Institute for Private Investors, Philanthropic Foundations Canada, Philanthropy Australia, and European Foundation Centre.   

The announcement said the Endowment Code is appropriate for charitable trusts, endowments, independent foundations, non-governmental organizations, philanthropies, and public funds.  

Charitable organizations that wish to claim compliance with the Endowment Code are asked to inform CFA Institute, which will provide an online list of all that have adopted the Endowment Code or whose existing code of ethics comply with it.
Compliance December 1, 2010

Report Says SEC Suit against BofA was Incomplete

A report from Securities and Exchange Commission (SEC) Inspector General David Kotz concludes that in its hurry to bring suit against Bank of America over its Merrill Lynch acquisition, the agency omitted significant violations from its initial charges.
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ABC News reports that the Inspector General’s investigation found SEC enforcement attorneys felt pressure to bring the case quickly because it was a high-profile issue. It also found that the agency sought a relatively small penalty against Bank of America, $33 million, after investigators initially “relied substantially on case precedent” to arrive at the figure.

According to the news report, a federal judge threw out that settlement amount and the deal was revised early this year to include a $150 million penalty. 

The report acknowledged, however, that the SEC staff operated “ably” under tight deadlines to investigate and bring the case against Bank of America.  

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The suit claimed Bank of America (BofA) Corp., certain officers, and directors concealed intended bonuses and losses at Merrill Lynch & Co after the bank agreed to acquire the investment firm (see Judge Moves Forward Shareholder Claims against Bank of America).  

Among the report’s recommendations is that the SEC review the level of cooperation among law enforcement agencies on investigations and determine where it could be improved. The report said SEC attorneys expressed the view that the office of New York Attorney General Andrew Cuomo, which also conducted an investigation of Bank of America, failed to cooperate fully with the SEC and refused to share some information.

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