MutualFundWire.com: The SEC Staff Lays Out Their "Distribution in Guise" Worries

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Thursday, January 7, 2016

The SEC Staff Lays Out Their "Distribution in Guise" Worries

The staff of the SEC just offered fundsters and others a better glimpse as to what the regulators are worried about when it comes to "distribution in guise."

Mary Jo White
Securities and Exchange Commission
Chairwoman

Yesterday the folks in the regulatory agency's Division of Investment Management released their first guidance update of 2016, and the 15-page report lays out concerns about "mutual fund distribution and sub-accounting fees." The update concludes with the staff recommending that mutual funds' boards "pay particular attention to fees paid to financial intermediaries for the servicing of mutual fund shareholder accounts, especially if those intermediaries provide distribution-related activities to the mutual fund." And the staff call on fundsters to help boards "understand the overall picture of the distribution and non-distribution intermediary arrangements."

The division's staff have been conducting the "Distribution in Guise" sweep for several years. Word leaked last May that the staff had the sweep's first mutual fund shop targets in their sights. In September, the SEC unveiled the first charges from the sweep, charges that First Eagle settled for nearly $40 million.

Fundsters who want to talk to the SEC about the report can reach out to Thoreau Bartmann, Marian Fowler, and Jacob Krawitz, all in the agency's investment company rulemaking office.

Printed from: MFWire.com/story.asp?s=53240

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