SEC Staff Issues Frequently Asked Questions Regarding Disclosure of Certain Financial Conflicts Related to Investment Adviser Compensation

October 23, 2019

On October 18, 2019, the SEC staff issued frequently asked questions (FAQ) about required disclosures of conflicts related to compensation advisers receive, such as 12b-1 fees and revenue sharing, for recommending certain investment products. In the FAQ, the staff of the Division of Investment Management discusses certain compensation arrangements and related disclosure obligations arising from both an investment adviser’s fiduciary duty and Form ADV. The document outlines examples of conflicts and how advisers should disclose and address them. The FAQ comes as the SEC continues its pursuit of intermediaries for conflicts of interest and related violations related to fund share class selection. See prior blog postings regarding SEC actions regarding fund share class selection: SEC Continues to Pursue Share Class Selection Cases and SEC Orders an Additional 16 Self-Reporting Advisory Firms to Pay Nearly $10 Million to Investors.


Compliance, Enforcement Actions, Investment Advisers, Investment Companies, Mutual Funds, Regulatory