Politico: Groups Petition SEC for Rule on Mutual Fund Fees

The advocacy groups supporting the petition along with ASA are all broadly geared toward less regulation and more business-friendly policy

IN CASE YOU MISSED IT

4.29.2020

By Kellie Mejdrich

The American Securities Association and three public interest organizations petitioned the SEC on Wednesday to produce a new rule related to mutual funds paying others to promote their shares.

The Financial Services Institute, the Competitive Enterprise Institute and the New Civil Liberties Alliance petitioned the financial regulator along with ASA, according to a filing with the SEC obtained by POLITICO. The groups are trying to undo a 2018 administrative action by the agency that they believe is an attempt to eliminate fees paid to investment advisers and other professionals for selling mutual fund shares.

The SEC has attempted to curb payments by mutual funds to investment advisers by forcing the funds to disclose the payments. But the groups claim the SEC enacted a substantive change in regulation by issuing guidance in the form of the announcement of an enforcement initiative, and as a result was able to sidestep the normal notice and comment process that a rulemaking would require.

“We will comply with clear rules of the road adopted using the formal rulemaking process; anything else flies in the face of how the rule of law in America is supposed to work,” said ASA CEO Chris Iacovella.

The advocacy groups supporting the petition along with ASA are all broadly geared toward less regulation and more business-friendly policy. Specifically, FSI wants lighter regulations on independent financial services firms and independent financial advisers. CEI is a conservative think tank, and NCLA is geared toward reducing the size of federal administrative proceedings.

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