The long awaited result of the SEC’s distribution in guise sweeps hit today; you can find the link here. Many of the points covered were expected, and most of the requirements for compliance identified are currently supported by the Oversight platform Delta Data actually developed in anticipation of this guidance. Here is the overarching theme in this news: the 12b1 plan represents the only funds that can be used for distribution expense, and anything that promotes sales in any way, whether direct or indirect, must be allocated as an expense to the advisor and/or other relevant service providers, not the fund. Fees related to distribution in excess of the 12b1 plan must be allocated to the advisor and/or other relevant service providers.
SEC Cranks Up Probe Into Fund Firms’ Fees
Inquiry centers on whether money managers are properly disclosing additional costs to investors
By Kirsten Grind
July 16, 2015 6:54 p.m. ET
U.S. securities regulators are examining whether mutual-fund managers are dipping more deeply than allowed into their investors’ money to compensate the brokerages that distribute their products, according to people familiar with the matter.
OppenheimerFunds, Franklin Templeton and J.P. Morgan Chase & Co. are among more than a dozen fund firms that have been reviewed by the Securities and Exchange Commission, which began a broad sweep of how companies sell their products about two years ago, these people said. In recent weeks the SEC’s examination unit referred some of these firms to its enforcement division, these people said. It isn’t known if the SEC will take action against any money managers. Read more
There are two issues the broker dealers are faced with that have caused these fines and rebates to customers as outlined in the article below. Most of the fines/rebates are around B/Ds selling A shares to retirement plans and charitable accounts in which they stated in their prospectus that they would waive those fees. Read more