Advisers

FYI: Another 36(b) Victory for Adviser

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FYI: A September 30, 2019 ruling from the US District Court for the Southern District of NY resulted in a victory for the adviser against Section 36(b) excessive fee claims brought by plaintiffs. The court’s 111-page opinion thoroughly analyzed the six ‘Gartenberg’ factors affirmed applicable to 36(b) cases by the Supreme Court in Jones v. Harris (2010). Two of the factors had been dismissed from the case in a partial summary judgment granted to the adviser in 2018. The other four factors were considered by the court in a bench trial, after which the court concluded that only one factor […]

Advisers

FYI: FAQs Address Adviser Compensation and Conflicts Disclosure

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FYI: Perhaps under the banner of better late than never, the Division of Investment Management yesterday posted FAQs that are a MUST READ for all advisers, addressing expectations and practices surrounding adviser compensation and the related conflicts that, according to the FAQs, are not being disclosed appropriately by some advisers. The FAQs help to pull together various seemingly disparate threads that have arisen recently but are rarely (or never) addressed in an integrated way, such as: the Share Class Selection Disclosure Initiative, which focuses on 12b-1 compensation, conflicts and disclosures in the selection of mutual fund share classes, other recent […]

Funds

FYI: Funds Warned About Inaccurate Performance and Fee Disclosures

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FYI: The Division of Investment Management has warned funds to verify the accuracy of their performance and fee disclosures prior to filing them with the SEC and providing them to investors. The warning was prompted by several disclosure issues observed by the staff, including funds: failing to reflect sales loads in the fund’s average annual returns table. making other performance errors in prospectuses, such as showing negative performance as positive and transposing performance of share classes or multiple indexes. incorrectly showing net expenses that exceed gross expenses in the expense table, resulting from the inaccurate reflection of fee waiver recoupments […]