Chicago partner Jim Lundy and associate Benjamin McCulloch authored “The First SEC Share Class Selection Disclosure Settlements: What We Learned & What’s Next?” for the April edition of the Investment Adviser Association (IAA) Newsletter - Compliance Corner.
Thirteen months after the SEC unveiled its Share Class Selection Disclosure Initiative, the agency has announced its first group of settlements with investment advisers who self-reported to the SEC conflicts of interest and disclosure violations related to 12b-1 fees. In this article, Jim and Ben outline key points of the settlements, the undertaking terms, and the lessons to be learned.
They also consider what the enforcement landscape will look like in coming months for remaining Initiative participants and they recap remarks recently given by Stephanie Avakian, Co-Director of the SEC’s Division of Enforcement, at the IAA 2019 Compliance Conference regarding the Initiative. Further, the article goes beyond the Initiative participants to touch on additional and related SEC enforcement efforts, including the SEC’s scrutiny of revenue sharing arrangements and the corresponding conflicts and disclosures, as well as possible consequences for qualifying firms that opted not to participate in the Initiative.
*Originally published in the IAA Newsletter, April 2019.