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News Breaks | | | | October 2, 2012 | | 07:48 EDT |  | MSCI | MSCI says ISS received Wells Notice on September 14
MSCI is making a further disclosure regarding the whistleblower complaint previously made to the SEC. On September 14, ISS received a Wells Notice from the Division of Enforcement of the SEC indicating its intent to recommend to the SEC a public administrative proceeding against ISS for violations of Sections 204A and 206 of the Investment Advisers Act of 1940 and Rule 206(4)-7 thereunder. We understand the basis of this action would be that while ISS did have in place policies and procedures restricting and safeguarding client voting information generally, ISS did not have policies and procedures specifically addressing communications with proxy solicitors. Additionally, ISS’s systems allowed the employee to view voting information pertaining to any of ISS’s clients as opposed to solely those clients assigned to the employee as a client account manager. While the systems were designed in this fashion to enable any ISS client account manager to service any client, this system design permitted the employee to view confidential voting information for any of ISS’s clients. We understand that an additional basis for the SEC’s action would be that although the Company had policies in place regarding the receipt of gifts and entertainment, ISS did not adequately train and supervise its employees relating to interactions between employees and proxy solicitors and the receipt of meals and entertainment provided to its employees by proxy solicitors. Since learning of the actions of the terminated employee, ISS has thoroughly reviewed its policies and procedures relating to confidential client information and the receipt of gifts and entertainment. As a result of this review, ISS has implemented a new policy specifically addressing communications and contacts with proxy solicitors, has enhanced its internal systems to further restrict internal access to client voting information, and has conducted further training regarding its gifts and entertainment policy. | |
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