The Regs Are Going To Get You: Navigating SEC Compliance Challenges for Publicly Traded Investments
June 17, 2025
Publicly traded fund reporting compliance is a high-stakes challenge. Miss a step, and the SEC’s going to get you tonight with fines or reputational damage. It’s a complex mix of manual tasks, mismatched data, and stakeholder overload, pushing CFOs to their limits. Modern tech could help streamline the process. Let’s dive into the key hurdles, highlight real regulatory penalties, and explore tools to keep things on track. Curious if these solutions can keep regulators at bay? Read on.
The Core Challenges
Public fund reporting is like tackling a fiendishly difficult task with multiple moving parts. Here’s the lineup of obstacles keeping managers up past midnight:
- Regulatory Scrutiny: No Room for Error
The SEC demands flawless reports. U.S. mutual funds have 60 days post-fiscal year to deliver, or fines hit hard. Terraform Labs faced a $4.68 billion SEC settlement in 2024 for securities violations (Reuters, June 2024). Barclays’ 2022 control failures led to a $361 million penalty for $17.7 billion in unregistered securities sales (Reuters, September 2022; SEC Press Release, September 2022). Precision is critical – regulators don’t miss a thing.
- Stakeholder Overload: Too Many Players
Reporting involves compliance, portfolio managers, traders, back-office teams, boards, auditors, and service providers. Sarbanes-Oxley (SOX) requires attestations from each, making coordination a manual slog. A misstep risks delays and fines.
- Outdated Processes: Stuck in the Past
Tasks like trade confirmations and reconciliations are redundantly checked despite independent systems. These clunky processes waste time and risk errors, exposing you to regulatory scrutiny.
- Relentless Deadlines: No Breather
Large fund families, managing dozens or hundreds of funds, face constant pressure from staggered fiscal year-ends. Missing deadlines invites penalties or audit issues.
- Data Misalignment: Clashing Records
Reports need NAV, disclosures, and risk details, but Accounting and Investment Books of Records (ABORs, IBORs) often don’t align, especially with subadvisors. Extracting data from Aladdin or Charles River is a manual headache, risking inaccuracies regulators flag.
- SOX: Overly Complex Rules
SOX demands attestations from portfolio managers to operations, feeling excessive. Streamlining without breaking rules is key to avoiding audit failures or fines.
- Rising Costs: A Heavy Burden
Audit fees hit funds hard, and excessive report drafts drive up costs. Without expense caps, investment advisors lack urgency to cut expenses, leaving funds to bear the load.
- Upstream Data Issues: Hard-to-Reach Sources
Collateral and risk data sit upstream in Bloomberg or Aladdin, outside NAV processes. Reporting teams struggle with extraction, risking errors regulators target.
A Smarter Path Forward
These challenges demand modern solutions. Here’s how cloud-based platforms can help keep you compliant:
- Automation for Accuracy: Automate data aggregation, reconciliations, and attestations to reduce errors that could spark trouble tonight.
- Internal Controls Automation: Streamline compliance with platforms that automate trade confirmations, reconciliations, and position checks with real-time audit trails. Teams can trace data from statements to source systems, run control tests, and address risks seamlessly, keeping regulators satisfied.
- Data Integration: Connect to over 100 source systems to unify data from Aladdin or Charles River, aligning ABOR-IBOR for regulator-ready reports.
- Continuous Controls: Automate periodic control testing to catch issues early, easing year-end pressure and keeping the SEC at bay.
- AI-Powered Insights: Use generative AI to draft narratives, analyze data, and spot discrepancies, strengthening controls and compliance.
- Streamlined Collaboration: Centralize workflows to simplify SOX attestations, trimming unnecessary players while maintaining audit-ready records.
The Bottom Line
Public fund reporting is a high-pressure game, and the regs will get you if you slip—Terraform ($4.68B fine) and Barclays ($361M) learned that the hard way. Cloud-based tech with automation, integration, and AI can help you navigate the complexity, though it’s not a cure-all.
Would you like to explore how these tools can help ensure that your reporting remains compliant and free of penalties? Contact us today.
Sources: Reuters, “Terraform Labs to Pay $4.68 Billion in SEC Fraud Case,” June 2024; Reuters, “Barclays to Pay $361 Million over Improperly Registered Securities Sales,” September 2022; SEC Press Release, “SEC Charges Barclays with Control Failures,” September 29, 2022.