SEC Announces Share Class Selection Disclosure Initiative

March 06, 2018

The Division of Enforcement (Division) of the U.S. Securities and Exchange Commission (SEC) on February 12, 2018, announced a Share Class Selection Disclosure Initiative (SCSD Initiative). Led by the Division’s Asset Management Unit, the SCSD Initiative is a new self-reporting program under which the Division is offering to recommend to the SEC standardized settlement terms for investment advisers that self-report failures to disclose conflicts of interest in connection with certain mutual fund share class selection practices. The SCSD Initiative targets advisers’ alleged failures to make necessary disclosures relating to the advisers’ receipt of 12b-1 fees for investing client funds in, or recommending that clients invest in, a 12b-1 fee-paying share class when a lower-cost share class of the same fund was available for the clients. The Division has offered similar self-reporting incentives in the past.

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