Marco Adelfio, Paul J. Delligatti and Jason F. Monfort
To explain the guidance published on January 6, 2016 by the SEC’s Division of Investment Management containing its views and recommendations relating to mutual fund distribution…
Abstract
Purpose
To explain the guidance published on January 6, 2016 by the SEC’s Division of Investment Management containing its views and recommendations relating to mutual fund distribution and sub-accounting fees.
Design/methodology/approach
Explains the SEC’s Office of Compliance Inspections and Examinations focus on “distribution in guise” payments, its 2013 “sweep exam,” an enforcement action against a fund’s adviser and affiliated distributor related to payments for distribution-related activities outside of a 12b-1 plan, lists SEC staff recommendations with respect to mutual fund distribution and sub-accounting fees, summarizes the SEC’s guidance on board oversight of sub-accounting fees, provides indicia that a payment may be for distribution-related activities, and points to the need for mutual funds to have policies and procedures designed to prevent violations of Section 12(b) and Rule 12b-1.
Findings
The guidance is an outgrowth of the staff’s observations from a three-year “distribution in guise” sweep exam of mutual fund complexes, investment advisers, broker-dealers and transfer agents conducted by the SEC’s Office of Compliance Inspections and Examinations and other offices and divisions of the SEC to identify whether firms were using fund assets to directly or indirectly finance any activities primarily intended to result in the sale of fund shares outside of an approved Rule 12b-1 distribution plan.
Originality/value
Practical guidance from experienced financial services lawyers.
Details
Keywords
Paul J. Delligatti and William P. Lane
The purpose of this paper is to summarize and discuss the implications of three related U.S. Securities and Exchange Commission (SEC) no-action letters dated October 26, 2017 that…
Abstract
Purpose
The purpose of this paper is to summarize and discuss the implications of three related U.S. Securities and Exchange Commission (SEC) no-action letters dated October 26, 2017 that seek to address the provisions of MiFID II related to “inducements”.
Design/methodology/approach
Provides background information regarding MiFID II and summarizes each of the three SEC Staff no-action letters: the SIFMA letter, the ICI letter and the AMG letter.
Findings
The no-action letters provide market participants with increased clarity as to how certain aspects of their business activities, in particular the “bundling” or “unbundling” of payments for research and execution, can comply with potentially competing systems of regulations.
Originality/value
Practical guidance from experienced financial industry and investment management lawyers.