U.S. market regulators are intensifying their scrutiny of assets that can be hard to sell in stressed markets after the failure of a high-yield bond fund overseen by Third Avenue Management LLC, Bloomberg News reported yesterday. The Securities and Exchange Commission said yesterday that it plans to scrutinize how mutual funds, exchange-traded funds and hedge funds value these less-liquid holdings and manage the risk that they can’t be sold when managers need the cash. The SEC said that its examiners also plan to review the role of brokers that match buyers and sellers for less liquid investments. The regulator recently had to contend with the failure of the $788.5 million Third Avenue Focused Credit Fund, which blocked clients from pulling their money because the fund couldn’t meet redemptions without selling holdings at steep discounts.
