06.09.26
SEC Puts FAs on Alert Over Hazy Billing Practices
by: Glenn Koch
The U.S. Securities and Exchange Commission (SEC) has issued a risk alert warning financial advisors to improve disclosure of “economic conflicts of interest,” particularly around billing practices, fees and compensation structures. The regulator said examinations have uncovered incomplete, misleading or missing disclosures in some advisory firms, as well as billing practices that do not always align with client agreements. The SEC highlighted issues involving cash sweep programs, money market revenue sharing, mutual fund 12b-1 fees, margin loan markups and affiliate broker compensation, where advisors may not clearly disclose earnings or conflicts. It also cited errors such as incorrect fee rates, charging inactive accounts, failing to exclude certain assets from fee calculations and inconsistent application of discounts or rebates.
Read the full article on Financial Advisor IQ