Broker-dealers and mutual fund executives aren't the only fund industry insiders who need to pay attention to the SEC
's 12b-1 reform proposal. In a webinar reported on by Fund Directions
, Drinker Biddle
partner Diana McCarthy
warns mutual fund directors that they should look at what the proposal means for the 15(c) process and on compensation to broker-dealers.
"If a fund is going to cap distribution fees and sales charges there will probably be some pressure on revenue sharing, soft dollars and portfolio brokerage even though we have a rule now that prohibits taking that into account in the selling of fund shares," McCarthy reportedly said in the webinar.
"This is something that the board will need to think about and watch carefully because this is an annual issue that takes place during the 15(c) contract renewal process."
For broker-dealers who set their own fees under the new proposal, boards would have to decide whether or not to approve those new shares, and the boards will also have to keep an eye on ongoing marketing and sales charges.
Neil Anderson, Managing Editor
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