SunTrust Investment Arm to Pay SEC $1.1M in High Fees Case Bloomberg BNA.
The federal Securities and Exchange Commission said SunTrust betrayed its clients by selling them mutual fund shares that charge extra fees, called 12b-1 fees, when cheaper share classes were available for the same mutual funds that didn’t charge the fees.
According to the SEC's order, the firm breached its fiduciary duty to act in clients’ best interests by recommending and purchasing costlier mutual fund share classes that charge a type of marketing and distribution fee known as 12b-1 fees. Investors.
Some funds also carry a 12b-1 fee, also known as a distribution fee. This is an annual fee that’s assessed to cover the cost of marketing and distributing the fund. Not all mutual funds have this fee and some of those that do roll it into the expense ratio.
And as broker-dealers shift to being compensated by levelized commissions outside of the funds — even if the consumer still pays a 1% fee via the broker-dealer equivalent to the 1% trail in a C share — the mutual fund itself will no longer have to.
The 12b - 1 fees paid by mutual funds held by plan participants and IRA holders went to Envoy's affiliated broker-dealer, Envoy Securities, LLC. The SEC says that during the relevant period, Envoy Securities received at least $24,893.26 in 12b - 1 fees in .
Built into most expense ratios are 12b - 1 fees , which are charged annually for a mutual fund's marketing and distribution costs. According to the Department of Labor (DOL), these fees may also “pay various service providers of a 401(k) plan pursuant to.
A faith-based advisor was censured last week after allegedly recommending expensive mutual fund share classes to its minster clients. The U.S. Securities and Exchange Commission issued a cease-and-desist order to Colorado Springs, Colo.-based Envoy .
While 12b - 1 fees were initially instituted 30-plus years ago to benefit investors, they have fallen short on this promise. Several decades of analysis show that mutual funds that charge 12b - 1 fees have been successful at incentivizing salespeople to.
In its complaint, the SEC alleges that SunTrust recommended that its clients purchase class A shares of mutual funds charging front-end loads and 12b-1 fees. Without informing its clients that less expensive share classes were available, the firm collected.
SEC Files Administrative Proceeding Against An Investment Services Firm For Improperly Recommending Higher- Fee ... JD Supra (press release.
The Securities and Exchange Commission continues its crackdown on firms’ use of more expensive Class A mutual fund shares as well as 12b-1 fees, levying recent actions against an RIA as well as SunTrust Bank’s investment services subsidiary.
The fees are to be paid monthly in arrears. Although fees are less than what a traditional bank charges you, Personal Capital has higher fees on average than other Robo Advisors. A bit of good news is that Personal Capital boasts a service that will.
Additionally, after giving effect to the foregoing fee waiver, the Adviser has agreed to limit the total expenses of the Fund (exclusive of interest, distribution fees pursuant to Rule 12b - 1 Plans, taxes, acquired fund fees and expenses, brokerage.