SEC Wants Control of Collective Investment Trusts

By law, collective funds are the turf of bank regulators. But Andrew Donohue, head of the SEC’s investment management unit, wants more control. He threatened to go after advisors who sell collective investment trusts, successfully pitting the SEC against bank regulators for oversight of approximately $1.6 trillion. Collective trusts work a lot like institutional mutual funds, and Donohue thinks the SEC should be able to regulate the trusts as it does mutual funds.

Steve Deutsch, researcher for Morningstar, says that collective trusts are heading for the mainstream of the asset management marketplace and that’s probably the real reason the SEC is getting involved.

“The SEC can’t get into the bank, but I can get into the advisors.” –Andrew Donohue, head of the SEC’s investment management unit.  

Scott Martin, SEC’s Top Cop Says Agency to Police Collective Investment Trusts, Trust Advisor Blog, April 17, 2010.