SEC Issues Long-awaited Distribution and Sub-accounting Guidance

On Jan. 6, 2016, the staff of the SEC’s Division of Investment Management released long-awaited guidance on mutual fund payments to intermediaries for services to omnibus and networked shareholder accounts.

The guidance reflects the IM staff’s views on a range of payments to financial intermediaries for non-distribution-related services, including sub-transfer agent, administration, sub-accounting and other shareholder servicing fees (the staff call these, collectively, the “sub-accounting fees”).

The guidance reaffirms that directors bear a substantial responsibility in approving these arrangements, expands the factors that boards should consider and identifies practices that should prompt greater board scrutiny …

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