SEC investigations into mutual fund management have made the need for distribution oversight a business critical mission; Delta Data has just released a product to manage this issue. Delta Data, partnering with Wheelhouse Analytics, has released the Distribution Oversight module for their popular Deal Manager product. The solution has been successfully tested with one of the top five asset managers in the country. 

"Oversight compliance is a very big topic of conversation within the asset management world. News about the SEC review of mutual fund companies is in national publications. SEC regulators are watching how firms monitor and evaluate the way in which their distributors do business. They're also looking at what conflicts of interest may exist and how fees are allocated and paid out. Our solution provides a method for asset management companies to minimize their risk of exposure to these investigations by providing an unprecedented level of transparency and clarity into the overall distribution network and how each service to the investor provided in this network is allocated," says Whitfield Athey, CEO of Delta Data. 

SEC sweeps and actions highlight the increased scrutiny on fees, oversight and conflict of interest issues.   Both the Wall Street Journal and Ignites recently reported on these themes, with the WSJ citing a top SEC official who said fund distribution is a "particular concern," and Ignites, citing the need to rethink definitions for shareholders services. Delta Data's Distribution Oversight module directly supports counterparty service management and payment definitions. 

Oversight is a complex issue, with many moving parts that may prove difficult for existing teams to track and manage. Chief Compliance Officers of mutual fund companies responded to current oversight demands for accountability by putting increased amounts of money and resources into their established oversight programs. Oversight teams in charge of these programs are often challenged with pulling in data and documentation from a number of silos throughout the business as well as complex datasets received from their counterparty. Consolidating these artifacts becomes a cumbersome process, and one in which a lot of key data points are not only altered or changed, but often inaccessible and not reported on at all. The tools and technology to bring all of these discrete systems together to meet the fund's oversight needs has moved from a want to a need.  

Delta Data's Distribution Oversight module takes into account the ICI oversight framework, allowing companies to customize and configure their annual and ad-hoc review processes within the counterparty management portal. By risk ranking counterparties based on their core attributes, fund companies can use key metrics from across the business to define not only who should be reviewed, but the frequency in which the review is taking place. Analytics provided in the toolset allows for a tailored Risk Index on which each distributor can be assessed. These review processes take into account Areas of Focus and Control Objectives that are applicable to counterparties in which asset managers are monitoring. Through Deal Manager, fund companies have the flexibility of using quantitative or qualitative testing procedures to respond to and rate each individual objective. 

The Distribution Oversight module is delivered as a SaaS application and comes pre-configured with all distribution firms in the industry. The initial load of basic TA data structures the system and the baseline oversight program. Flexibility through configuration of deals, terms, documents and control objectives specific to each client allow for rapid adoption and integration with the oversight program in place. Out of the box dashboards that track the oversight program and pre-canned reports that support Board Reporting are included. Target implementation timeframe for a large fund complex is under eight weeks.