March 11, 2019 / 7:23 PM / in a month

SEC in settlement with investment advisers on mutual fund sales

WASHINGTON (Reuters) - The U.S. Securities and Exchange Commission announced on Monday it had reached a settlement with 79 investment advisers on charges of the improper sale of mutual fund shares, returning more than $125 million to clients.

The settlements are the result of an SEC initiative, created in February, encouraging advisers to self-report violations in cases where they did not adequately disclose conflicts of interest on certain mutual fund investments. Specifically, the SEC said the advisers charged had sold clients on higher-cost mutual funds when lower-cost options of the same fund were available, while receiving fees from those funds.

“An adviser’s failure to disclose these types of financial conflicts of interest harms retail investors by unfairly exposing them to fees that chip away at the value of their investments,” Stephanie Avakian, co-director of the SEC’s enforcement division, said in a statement.

None of the firms involved in the settlements admitted or denied the SEC’s findings. Under the terms of the initiative, the firms avoided financial penalties by self-reporting, so long as they agreed to compensate harmed clients and fixed their disclosures.

Reporting by Pete Schroeder; Editing by Leslie Adler

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