June 13, 2018

Clock Ticking for RIAs to Self-Report Sales of 12b-1 Fee Mutual Fund Share Classes

Chicago partner Jim Lundy discussed the SEC’s Share Class Disclosure Initiative and the deadline for registered investment advisers to self-report the purchase of 12b-1 fee share classes when lacking conflicts disclosures in an InvestmentNews article titled “Clock Ticking for RIAs to Self-Report Sales of High-Fee Mutual Fund Share Classes.”

The SEC Share Class Disclosure Initiative brings with it certain favorable settlement terms for advisers who self-report that they had purchased 12b-1 fee share classes for clients when lower fee options were available in the same fund. Jim speculated that “it's going to be a relatively sizable amount of firms," and that "[i]t's [the initiative is] going to be effective because they've gotten the attention of the industry.”

The consequences for firms that ended up not self-reporting may be dire. Jim observed that “[i]f they find firms who they think should have self-reported but didn't, they'll likely bring enforcement action[s] . . .”

Read “Clock Ticking for RIAs to Self-Report Sales of High-Fee Mutual Fund Share Classes.”

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