[ by Howard Haykin ] The SEC sued a Malaysian investment adviser on charges that, for more than a decade, the adviser charged a U.S. registered fund for advisory services that were never provided.  Such actions would be a breach of an adviser's fiduciary duty with respect to compensation under the Investment Company Act of 1940. Respondent Investment Adviser. AMMB Consultant Sendirian Berhad ("AMC"), a sub-adviser to The Malaysia Fund, Inc. ("Fund"), charged the Fund more than $1.8 million in investment advisory fees for certain advisory services AMC did not provide.  AMC is a unit of AMMB Holdings Berhad, one of Malaysia’s largest banking groups.  Morgan Stanley Investment Management, Inc. (MSIM) is the principal investment adviser to this closed-end fund. SEC Findings and Allegations. AMC allegedly misrepresented its services during the fund’s annual advisory agreement review process for each year for more than 10 years, and AMC collected fees for advisory services that it did not provide.  The case follows the SEC’s recent related action against the Malaysia Fund’s primary adviser, MSIM, and is part of an inquiry into the investment advisory contract. AMC’s advisory fees were approved each year from 1996 to 2007 as part of the "15(c) process," a reference to Section 15(c) of the Investment Company Act of 1940, which requires a registered fund’s board to annually evaluate the fund’s advisory agreements, and advisers to provide the board with information reasonably necessary to make that evaluation. According to the SEC, AMC submitted a report to the Malaysia Fund’s board of directors each year that falsely claimed that AMC was providing specific advice, research, and assistance to MSIM for the benefit of the fund.  In reality, the SEC complaint says that AMC’s services were limited to providing 2 monthly reports based on publicly available information that MSIM did not request or use.  Moreover, the SEC alleged that AMC failed to adopt and implement adequate policies, procedures, and controls over its advisory business, contrary to certifications provided to the fund’s directors in 2006 and 2007. AMC’s advisory agreement with the fund was terminated in early 2008 after the SEC’s examination staff inquired about the services AMC was purportedly providing to the fund. SEC Sanctions and Stated Violations. Based on AMC's alleged actions, AMC would have breached its fiduciary duty with respect to the receipt of compensation within the meaning of Section 36(b) of the Investment Company Act of 1940;  AMC also allegedly would have violated Sections 206(2) and (4) of the Investment Advisers Act of 1940, and Rule 206(4)-7 thereunder, and Section 15(c) of the Investment Company Act of 1940. AMC agreed to settle the SEC charges by: (i) accepting a bar from violating these provisions in the future; (ii) paying $1.3mn in disgorged advisory fees paid, and (iii) paying a $250K penalty. SEC Staff Credits. Investigation by Chad Earnst, Christine Lynch, and Jessica Weiner of SEC Enforcement's Asset Management Unit, along with Tonya Tullis and Edward McCutcheon.  Karen Stevenson, Susan Schneider and Dennis Delaney conducted the related examinations. For further details, go to:   [SEC PR 12-120, 6/26/12] and   [SEC Complaint].