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Watching the Pendulum Swing on 401(k) Plan Expenses

There have been several articles in the news recently about how mutual fund expense ratios are continuing to drop for 401(k) plan participants. These were based on a report issued by the Investment Company Institute in August 2015 called Read more

SEC “Distribution in Guise” Sweep

There has been a lot of news recently about the SEC sweeps where they are looking at fund companies that may be paying out distribution fees but disguising them as servicing fees. With all that the SEC has on their plate, you may be asking yourself, “why is this so important to them”? Well, the SEC Read more

The Motivations behind the SEC “Distribution in Guise” Sweeps

The biggest and most vexing news concerning mutual funds this year involves a three letter acronym: SEC, followed by a three letter word: why? The SEC has been conducting deep drill down sweeps into the practice of fund companies paying out distribution fees disguised as service fees. The question floating around the industry is: why has this become important to the SEC now? Well, to understand the present involves looking at the past, and that requires a review of the SEC’s Rule 12b-1

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WSJ Article on Distribution in Guise Issue

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