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ARTICLE · 27 JULY 2016

SEC Examiners Focused On Fund Share Class Conflicts Of Interest

Morgan Lewis
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OCIE recently published a Risk Alert announcing that it will examine the potential conflict of interest created by registered investment advisers being financially incentivized to recommend certain share classes to clients.

United StatesFinance and Banking
Amy Greer
Amy Greer

OCIE recently published a Risk Alert announcing that it will examine the potential conflict of interest created by registered investment advisers being financially incentivized to recommend certain share classes to clients.

On July 13, the US Securities and Exchange Commission's (SEC's) Office of Compliance Inspections and Examinations (OCIE), which conducts the SEC's National Exam Program, published a Risk Alert1 announcing that, as part of its focus on the protection of retail investors, it will examine whether registered investment advisers are conflicted by financial incentives or other compensation arrangements when recommending certain share classes of financial products to clients. Of specific interest is advice surrounding investments in mutual funds and 529 plans,2 which have share classes with significant sales loads or distribution fees.

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