Thus, speaking for fund sponsors, not fund shareholders, the ICI has argued to the SEC that 12b-1 fees
"have permitted the establishment of viable distribution systems which are essential to the continued existence of open-end funds and their shareholders.
Known as 12b-1 fees
in mutual fund jargon, marketing fees go to pay for marketing and advertising costs, and also to compensate selling agents.
The Securities and Exchange Commission continues its assault on 12b-1 fees
In case you missed it, the Securities and Exchange Commission's annual investment advisor compliance outreach summit, held in mid-April at the agency's Washington headquarters, was chock full of vital information about what the securities regulator will be zeroing in on this year -- particularly 12b-1 fees
, succession planning and third-party advisor audits.
In one case, a fiduciary received 12b-1 fees
from mutual funds he recommended-along with the adviser's stated fee.
For example, broker/dealers (B/Ds) may receive 12b-1 fees
, insurance commissions and revenue sharing.
A respected money manager recently condemned the SEC's approval of 12b-1 fees
in strong, unequivocal terms steeped in frustration and disappointment:
The concern that has surrounded 12b-1 fees
is that they have been sold inappropriately, he continues.
So-called 12b-1 fees
are paid by a mutual fund out of a fund's assets to cover distribution expenses and sometimes shareholder service expenses.
For example, any 12b-1 fees
a broker/dealer receives should be disclosed upfront as indirect compensation under the rule, and a failure to do so can result in a prohibited transaction.