SEC Looks to Save Self-Reporting Advisers Cash in High-Fee Cases

By Andrew Ramonas

Investment advisers could avoid millions of dollars in fines under a new SEC program that encourages them to contact the agency about mutual fund clients they placed into high-fee share classes when cheaper alternatives existed.

The Securities and Exchange Commission’s enforcement lawyers won’t recommend financial penalties for advisers who self-report securities law violations concerning mutual fund class selection issues as part of the Share Class Selection Disclosure Initiativeunveiled Feb. 12. The advisers, however, still must return ill-gotten gains to harmed clients.

Advisers have a fiduciary duty under the Investment Advisers Act of 1940 to disclose all ...