SEC continues trend of cases on 12b-1 fee violations (ThinkAdvisor)

Since ending the voluntary self-reporting by firms during its share class initiative, the SEC continues to bring cases on 12b-1 fees citing share class selection and revenue sharing violations. These appear to be follow-on actions against firms that were previously under investigation during the SEC initiative. One recent case against Cetera Advisors resulted in a $9 million settlement with the SEC. The SEC found that the firm invested clients in mutual fund share classes charging recurring 12b-1 fees when it was aware that clients were eligible for lower cost shares in the same funds without 12b-1 fees. FrontLine’s Founder and President Amy Lynch comments that rulemaking by year-end is expected by the SEC to address 12b-1 fees. Ms. Lynch adds that the SEC wants to rein in the use of 12b-1 fees, which continue to decline at firms, by seeing through its rulemaking initiatives that are part of its agenda on fund fee disclosure and reform. See ThinkAdvisor, “Cetera to Pay $9M Over 12b-1 Fee Violations“