At a recent conference, Mary Jo White, SEC chairman, announced that the SEC will look to increase its scrutiny of the mutual fund asset management segment to ensure that appropriate risk controls by such investment managers are in place. According to Chairman White, it is not clear that the industry has implemented risk controls sufficient to meet the risks provided by new products and strategies.

According to Chairman White, in order for the SEC to evaluate and monitor this area, staff members will focus, during field examinations, on the “risks created by funds’ liquidity and use of derivatives.” The industry is required to conduct periodic stress tests per the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The SEC will be stepping up its efforts to determine if such stress tests are being conducted and to provide guidance to the industry on how to most effectively test the risks and further implement the controls to monitor those risks by asset managers