Tag: revenue sharing

A recent cease-and-desist order filed by the Securities and Exchange Commission underscores the fact that revenue sharing among financial advisers and ‘parties in interest’ is not necessarily an inherent problem—but a failure to disclose the relationship and the potential for conflict is.

Researach also found that mutual funds that pay revenue sharing are more likely to be added to plan investment menus and are less likely to be deleted from them

The advice concerned mutual funds, illiquid alternative investments and cash sweep vehicles.

A district court in California has proven to be skeptical of claims suggesting that active management funds are categorically imprudent retirement plan investments; the ruling also defends the use of revenue sharing. 

The proposed class action lawsuit against TriNet HR follows the same template as numerous others filed by the law firm Capozzi Adler.

The suit alleged excessive fees were paid to the recordkeeper of the company's 401(k) plan through undisclosed revenue sharing.

The Securities and Exchange Commission takes issue with revenue sharing tied to a preferred broker’s “transaction fee” program, underscoring how fee-based advisers are not immune from allegations of conflicts of interest.

Beyond the issue of excessive compensation, the lawsuit questions the collection of “float interest” and asks whether BTG International permitted a provider to create a “captive market for 401(k) rollovers.”

In the majority of cases, plan sponsors that participated in Callan’s 2019 Defined Contribution (DC) Trends Survey said their plan consultant/adviser conducted fee benchmarking, and in 2019, sponsors will be looking to switch to lower-fee share classes and to more institutional vehicles.

The court officially ended the case by approving a dismissal motion jointly filed by the parties.

Attorneys warn the “other shoe has dropped” in the SEC’s special Share Class Disclosure Initiative—and RIAs that did not self-report potential 12b-1 fee disclosure violations are now being investigated.

One case focused on excessive fees for recordkeeping, administrative, and investment services, and the other focused on revenue sharing.

The new lawsuit alleges the university engaged in prohibited transactions when it used revenue sharing from plan investments to pay for HR staff salaries and fringe benefits.