Securities and Exchange Commission together with the National Association of Securities Dealers is investigating gifts received by employees of mutual fund advisers from brokerage firms. Regulators suspect a possible conflict of interest as brokerages might be heaping private jet rides, expensive wine and antiques on mutual fund executives “to curry their favor," said a SEC representative.

 

According to NASD regulations, gift-giving is illegal in certain cases. SEC requires mutual funds to disclose payments that might have an impact on their investment decisions and lead to conflicts of interest.

The inquiry is "broad-based” and embraces 20 brokerages.

 

The mutual fund industry has had little time to recover after the scandal concerning improper trading of fund shares including market-timing that hurt interests of small shareholders to benefit a few large investors. The probe cost the industry $2 billion in fines and other settlement costs.