In a February 26, 2015 speech entitled “Conflicts, Conflicts Everywhere,” Julie M. Riewe, Co-Chief of the SEC Division of Enforcement, Asset Management Unit (AMU), discussed the AMU’s 2015 enforcement priorities, emphasizing conflicts of interest as an “overarching, perennial priority.” She stated that the AMU divides the asset management industry into three categories by investment vehicle: registered investment companies, private funds (both hedge funds and private equity funds) and other accounts (such as separately managed accounts), with each vehicle presenting unique risks and thus warranting tailored enforcement priorities.

As to registered investment companies, Ms. Riewe identified the following priorities:

• valuation, performance and advertising of performance;

• funds deviating from investment guidelines or pursuing undisclosed strategies;

• fund governance, including boards’ and advisers’ discharging of their obligations under Section

15(c) of the 1940 Act when they evaluate advisory and other typ es of fee arrangements; and

• fund distribution, including whether advisers are causing funds to violate Rule 12b-1 by using fund assets to make distribution payments to intermediaries outside of the funds’ Rule 12b-1 plan, whether funds’ boards are aware of such payments, and how such payments are disclosed to shareholders.

Ms. Riewe concluded her speech with a focus on the AMU’s “overa rching” concern with conflicts of interest, as relevant to all types of investment vehicles. She noted that, in nearly every open matter, at least in part, the AMU is examining whether the adviser in q uestion has “discharged its fiduciary obligation to identify its conflicts of interest and either (1) eliminate them, or (2) mitigate them and disclose their existence to boards or investors.”

Specifically, Ms. Riewe noted her expectation that the AMU will recommend a “number of conflicts cases for enforcement action, including matters involving best execution failures in the share class context, undisclosed outside business activities, related-party transactions, fee and expense misallocation issues in the private fund context, and undisclosed bias toward proprietary products and investments.”

Citing the Distribution in Guise Initiative, Ms. Riewe also ide ntified the “conflicts presented by registered fund advisers using fund assets to grow the fund and, consequently, the adviser's own fee" as ripe for enforcement action.