New York partner Kay Gordon was quoted in an Investment News article titled, “Regulators Bare Their Teeth on Excessive Fees.”
A regulatory clampdown on overcharging clients was amplified this week with a move by Finra against an investment company and by a response from an investment banker to Securities and Exchange Commission pressure.
The actions highlighted the emphasis that each regulator has put on hunting out excessive fees, and could reverberate in the retail investment adviser sector. Both the Financial Industry Regulatory Authority Inc. and the SEC have made scrutiny of fees a regulatory and examination priority this year.
Finra, the industry-funded broker-dealer regulator, levied a $350,000 fine against Fidelity Investments for what it said was inappropriately charging more than 20,000 clients a total of $2.4 million for certain transactions in fee-based accounts in its Institutional Wealth Services Group.
In another example this week, the private equity firm KKR & Co. refunded money to investors in some of its funds after the SEC determined it had overcharged them, according to a Wall St. Journal analysis.
The regulators are attuned to how ordinary investors are hurt by high fees, even more so than the institutional clients that were allegedly hurt by KKR's practices, said Kay.
“On the retail side, it's even more sensitive. It's a more compelling case,” Kay said.
To read the entire article, click here.