The SEC sanctioned the adviser to a mutual fund family for allocating IPOs to the complex’s smaller funds without adequately disclosing the allocation policy or risks.  Significantly, the SEC blamed the firm’s failures on an inadequately resourced compliance program.  The SEC alleges that the CCO, who had little compliance experience, also served as the COO and the CFO and had little staff support despite requests for additional resources.  The SEC did not charge the CCO but asserts that the respondent violated Rule 206(4)-7 for failure to “provide its compliance program with adequate resources in a timely manner.”

OUR TAKE: The SEC stresses the need to properly resource the compliance function.  The significance of this particular action is the SEC specifically asserting that a better compliance program would have prevented the underlying violation. 

http://www.sec.gov/litigation/admin/2011/33-9182.pdf