The degree of expertise, or otherwise, in funds management of AMMB Holdings was recently the cause of an adverse finding by the Securities and Exchange Commission of the United States. The SEC action, which commenced in November 2011, concerned the Malaysia Fund Inc, a closed-ended equity mutual fund.The fund had two co-managers: Morgan Stanley Investment Management Inc (MSIM) and AMMB Consultant Sdn Bhd (a subsidiary of AMMB).According to the SEC's writ, MSIM, as primary investment adviser to the fund, falsely "represented to investors and the fund's board that the fund's Malaysian sub-adviser was providing certain services that the sub-adviser in fact was not providing."The sub-adviser was AMMB Consultant.According to the SEC, "Each year during the relevant period [from 1996 to 2007]  in connection with the fund's annual investment advisory contract approval process, AMMB submitted to MSIM a report for the board that falsely claimed it was providing specific research, intelligence, and advice to MSIM. "MSIM included this report as part of the materials it submitted to the Fund's Board for the renewal of its and AMMB's advisory agreements."The SEC found that the fund paid around US$1.8 million to AMMB, between 1996 and the end of 2007, "for advisory services it did not receive". Only MSIM became subject to SEC action, since it alone was responsible for issuing annual reports to shareholders and "repeatedly issued reports representing that AMMB was providing advisory services to MSIM, when in fact it was not."The SEC found that AMMB provided MSIM with "two minor monthly reports" that were, in fact, in the public domain.As a result of the action, MSIM entered into a US$3.3 million settlement with the SEC without admitting or denying guilt. The fund terminated the fund's advisory relationship with AMMB. But AMMB remains co-fund manager. AMMB has not informed the Malaysian Exchange of the SEC action and the matter has gone largely unreported in Malaysia, even if it has been reported extensively elsewhere.