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SEC Continues to Pursue Advisers That Fail to Make Adequate Disclosures About Selection of Mutual Fund Share Classes

Mutual fund share class selection, which presents conflicts of interest for advisers, has been the subject of significant SEC scrutiny over the past year. In a recent settlement order with a dually registered investment adviser and broker-dealer, the SEC claimed that the adviser failed to disclose that it received a share of 12b‑1 fees on sales of mutual funds and failed to recommend to eligible clients share classes that did not charge 12b‑1 fees. This article details the SEC’s allegations, the adviser’s alleged compliance failures and the terms of the settlement. See “SEC Settles Three Additional Enforcement Actions for Inadequate Share-Class Disclosures” (May 17, 2018).

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