The following are summaries of key developments in the investment management industry. More detailed coverage of these and other topics can be found here.

 SEC Issues Guidance on Mutual Fund Distribution and Sub-Accounting Fees

The Securities and Exchange Commission’s (SEC) Division of Investment Management has issued a Guidance Update (the guidance)  outlining their views and recommendations that resulted from the “Distribution in Guise” sweep examination that recently was concluded. The guidance focuses on the conflicts of interest that arise when mutual fund assets are used to pay for subaccounting provided by financial intermediaries that also distribute the funds, if such payments are not made pursuant to a plan of distribution adopted pursuant to Rule 12b-1 under the 1940 Act (a Rule 12b-1 Plan), and the ways that investment advisers to funds and the funds’ boards of directors can address these conflicts.

SEC Charges Investment Advisory Firm with Fraud

The SEC announced fraud charges against Atlantic Asset Management LLC (AAM), an investment advisory firm, alleging AAM didn't inform clients of a conflict of interest that would benefit the firm.

According to the SEC’s December 15, 2015, complaint, a company that partially owns AAM is also a parent company of a broker-dealer. The SEC alleged that AAM invested more than $43 million of its clients’ funds in illiquid bonds without disclosing the conflict of interest created by the bond sales generating a private placement fee for the broker-dealer that is affiliated with AAM.  These actions, the SEC alleged, constituted securities fraud.

To learn more about these developments and other investment management news, please contact a member of the Ballard Spahr Investment Management Group or the attorney with whom you regularly work.


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