Schapiro: SEC will act on 12(b)-1 fees this year

Schapiro: SEC will act on 12(b)-1 fees this year
The Securities and Exchange Commission will reassess the 12(b)-1 fees collected by brokers as compensation for selling and servicing mutual funds, SEC Chairman Mary Schapiro said today.
APR 01, 2010
The Securities and Exchange Commission will reassess the 12(b)-1 fees collected by brokers as compensation for selling and servicing mutual funds, SEC Chairman Mary Schapiro said today. Speaking at a conference in Washington, Ms. Schapiro noted that the 12(b)-1 fee issue is one of the initiatives that the SEC will move on this year. “The problem is that investors may have no idea these fees are being deducted, what services they are paying for or who they are ultimately compensating,” she said. “That's why I believe we need to critically rethink how 12(b)-1 fees are used and whether they continue to be appropriate.” She acknowledged that changing the 12(b)-1 system, on which brokers depend to cover the cost of providing service to their customers, “is no small matter.” But since the fees were first allowed in 1980, the mutual fund market has grown and changed, and “it is past time to reassess their need and their effectiveness,” she said. Brokers collect about $13 billion a year in such fees. Ms. Schapiro also said she will push her agency to move ahead on a point-of-sale-disclosure proposal that would require brokers to provide investors with information about securities products and services, their compensation — and conflicts of interest — at the time investors are making decisions, rather than after sales have been made. “In the past, there has been significant industry resistance to this seemingly level-headed concept,” she commented. “I am hopeful, however, that a focus on the needs of retail investors will prevail.”

Latest News

401(k) participants seek advice, but few turn to financial advisors
401(k) participants seek advice, but few turn to financial advisors

Cerulli research finds nearly two-thirds of active retirement plan participants are unadvised, opening a potential engagement opportunity.

Court revives lawsuit over 15% fund return promise
Court revives lawsuit over 15% fund return promise

'Nostradamus' real estate entrepreneur accused of misleading investors on social media despite SEC's objections.

Los Angeles Federal Credit Union splits from LPL’s CFS to Cetera
Los Angeles Federal Credit Union splits from LPL’s CFS to Cetera

LPL loses another institutional client as Cetera adds a $160 million win to its credit union partnership streak.

UBS keeps focus on costs in US wealth management business
UBS keeps focus on costs in US wealth management business

Meanwhile, the bank is also investing in technology for its financial advisors in the United States.

Vanguard seeking SEC green light to expand trademark tax-busting fund design
Vanguard seeking SEC green light to expand trademark tax-busting fund design

The Jack Bogle-founded firm is looking to apply its famed dual-share class structure to actively managed strategies.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today’s choppy market waters, says Myles Lambert, Brighthouse Financial.

SPONSORED Beyond the dashboard: Making wealth tech human

How intelliflo aims to solve advisors' top tech headaches—without sacrificing the personal touch clients crave