October 09, 2012

Diana McCarthy Quoted in Fund Action

Philadelphia partner Diana McCarthy spoke to Fund Action on the topic of a new probe by the Securities and Exchange Commission's Office of Compliance Inspections and Examinations (OCIE) into mutual fund distribution arrangements.

OCIE Deputy Director Andrew Bowden termed the move a "fact-finding" mission that could lead to rulemaking, guidance or enforcement actions. Examiners are looking at the role advisors, boards and distributors play in the payment of distribution and other fees.

The Investment Company Institute informed its members over the summer that the SEC had requested a number of documents from mutual fund firms on distribution arrangements.

The ICI letter stated that the SEC's Boston office requested documents from firms, with "a view towards ensuring that, as broker/dealers experience declining revenue streams, they not look to increase their sub-TA fees to compensate them for distribution expenses."

Diana said these questions “are going to the nature of the arrangement, the controls around the arrangement, and what exactly the parties are doing for the mutual funds.”

"This is all geared toward, 'How did you figure out how much to pay these people and what were the negotiation points with these different intermediaries? And, how did you arrive at the amount that you're paying them?’” she said.

To read the entire article, click here.

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