New York-based Mortgage Industry Advisory Corporation (MIAC) has agreed to settle with the Securities and Exchange Commission (SEC) over allegations of multiple compliance failures. The investment adviser and analytics firm will pay $100,000, according to the agreement made public on Monday.
The case first started in 2006, when the SEC’s division of examinations received notice of some deficiencies at the company, among them failures to adopt and implement written compliance policies and procedures, conduct an annual review of its compliance program and establish and enforce a code of ethics, the agency said.
MIAC consented to a cease-and-desist order without admitting or denying the findings.
A spokesperson for the company did not immediately reply to a request for comments.
According to the consent order, MIAC maintained an employee handbook, but it was not a compliance manual. It was designed, among other things, to describe some of the employee policies, programs, and benefits, the SEC said.
“While the Employee Handbook (…) included a section that described insider trading generally, the Employee Handbook primarily addressed general human resources issues, including unexcused absences, sexual harassment, and dress codes. The Employee Handbook did not include any specific mention of the Advisers Act or the rules adopted thereunder.”
In addition, the consent order states that while MIAC maintained written internal controls concerning its business operations to guide its employees in their day-to-day business functions, these policies were not reasonably designed to prevent violations by the adviser and its supervised persons.
“The order also finds that MIAC only implemented new policies and procedures, began conducting annual compliance reviews, and adopted a written code of ethics in February 2022 after a 2021 examination by the Division of Examinations again noted MIAC’s compliance deficiencies,” the SEC said in a statement.
In 2022, MIAC hired a new chief compliance officer tasked with improving MIAC’s compliance program and retained a third-party compliance consulting firm to advise on its overall compliance program and its policies and procedures.
MIAC, registered as an investment advisor since 2002, had about $1.195 billion of regulatory assets under management, according to filings with the SEC on March 20, 2023.
The company, which provides risk management and hedging advice to mortgage originators and holders, employs approximately 90 individuals, eight of whom perform investment advisory functions.