SEC Regulators Now Examining 12b-1 Fees

By NAPA Net Staff • 4/8/2015 • 0 Comments

As part of its exam cycle, the SEC is reviewing the “entire spectrum of 12b-1 fees,” according Marc Wyatt, deputy director of the agency’s Office of Compliance Inspections and Examinations (OCIE).

Speaking at a District of Columbia Bar Association event on April 7, Wyatt said that OCIE is “conducting a series of [12b-1 fee related] exams to provide to the commission on the current practices and how they are developed,” ThinkAdvisor’s Melanie Waddell reports. Wyatt told Waddell after his remarks that OCIE is “looking at the whole complex” of 12b-1 fees.

Wyatt was joined by Julie Riewe, co-chief of the SEC Enforcement Division’s Asset Management Unit. Riewe will replace OCIE Chief Andrew Bowden, who is leaving the agency at the end of this month to return to the private sector. Echoing the conflict-of-interest theme of the DOL’s Employee Benefit Security Administration, Riewe asserted that “nearly everything” the Asset Management Unit looks into involves conflicts, both in proprietary investments or products and in undisclosed fee arrangements. For instance, “revenue flowing from BD to advisor is not being disclosed,” she said. 

According to the ThinkAdvisor report, Wyatt advised firms to be aware of conflicts that can possibly arise when they bring on new business lines and new products: “When you walk into a firm and they say there are no conflicts, [they] haven’t considered all the risks in [their] business.”

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