The MFWire
Manage Email Alerts | Sponsorships | About MFWire | Who We Are

Subscribe to MFWire.com's News Alerts [click]

Rating:SEC Smites Its First Email Routing List Email & Route  Print Print
Tuesday, September 22, 2015

SEC Smites Its First "Distribution-In-Guise" Target

News summary by MFWire's editors

Mary Jo White and Co just smote their first mutual fund shop over "improperly using mutual fund assets to pay for the marketing and distribution of fund shares." And no, it wasn't OpFunds.

Bridget Macaskill
First Eagle Investment Management
President, Chief Executive Officer
Yesterday the SEC unveiled a nearly-$40-million settlement with First Eagle Investment Management [profile] and its FEF Distributors affiliate, the first such charges and settlement under the SEC's multi-year "Distribution-In-Guise" sweep. First Eagle issued the following statement on settlement:

We are pleased to have reached an agreement with the SEC that will allow us to reimburse affected fund shareholders. The SEC has acknowledged First Eagle's cooperation, noting that we acted promptly to remedy the issue and that we immediately offered to return the money paid from the funds' assets. We sincerely regret this matter and have taken steps to strengthen our policies and procedures. Our core values center around the prudent stewardship of our clients' capital, and this extends to ensuring that all our practices meet the highest standards of integrity and accountability.

The SEC accuses First Eagle of using mutual fund assets to pay for distribution and marketing while calling it sub-TA fees instead of 12b-1s.

"First Eagle and FEF inappropriately used money belonging to the shareholders of the funds to pay for services clearly intended to market the funds and distribute their shares," states Andrew Ceresney, director of the SEC's enforcement division. "Unless part of a 12b-1 plan, the firm should bear those costs, not the shareholders."

The "Distribution-In-Guise" sweep has been looming over the mutual fund industry for several years, and this spring word leaked that the SEC was investigating OpFunds and at least one other fund firm. This summer the Wall Street Journal reported that more than 12 fund shops, including Franklin and JPMAM, were examined in the first stage of the sweep, though there was no word on how many of those examinations were referred to the enforcement division for possible action.

InvestmentNews, MarketWatch, the New York Times, Reuters, ThinkAdvisor, and the WSJ all reported on the settlement. 

Edited by: Neil Anderson, Managing Editor

Stay ahead of the news ... Sign up for our email alerts now

 Do You Recommend This Story?

Return to Top
 News Archives
2024: Q3Q2Q1
2023: Q4Q3Q2Q1
2022: Q4Q3Q2Q1
2021: Q4Q3Q2Q1
2020: Q4Q3Q2Q1
2019: Q4Q3Q2Q1
2018: Q4Q3Q2Q1
2017: Q4Q3Q2Q1
2016: Q4Q3Q2Q1
2015: Q4Q3Q2Q1
2014: Q4Q3Q2Q1
2013: Q4Q3Q2Q1
2012: Q4Q3Q2Q1
2011: Q4Q3Q2Q1
2010: Q4Q3Q2Q1
2009: Q4Q3Q2Q1
2008: Q4Q3Q2Q1
2007: Q4Q3Q2Q1
2006: Q4Q3Q2Q1
2005: Q4Q3Q2Q1
2004: Q4Q3Q2Q1
2003: Q4Q3Q2Q1
2002: Q4Q3Q2Q1
 Subscribe via RSS:
Add to My Yahoo!
follow us in feedly

  1. MFDF webinar - Lessons Learned from the Regional Bank Volatility and the Impact on Registered Funds, June 18
  2. IMEA webinar - Snapshot on the Talent Landscape, June 18
  3. 2024 MMI National Accounts Roundable, June 18
  4. MMI webinar - RIA Consolidators: The New Key Accounts?, June 20
  5. MFDF Director Discussion Series - Open Forum (Philadelphia), June 20
  6. MMI webinar - DoL Fiduciary Rule Update: What Are the Implications?, June 21
  7. WE Chicago - Pre-Morningstar Conference reception, June 25
  8. Celebrating 100 Years of the Mutual Fund, June 25
  9. New York YPEM Cornhole Classic, June 25
  10. Morningstar Investment Conference Conference 2024, Jun 26-27
  11. 2024 MMI Institutional Roundtable, June 26
  12. WE PNW Seattle - Pickleball and Networking, June 27
  13. Celebrating 100 Years of the Mutual Fund, July 11
  14. MFDF webinar - Mid-Year Tax Update for Registered Investment Companies, July 16
  15. MFDF Director Discussion Series - Open Forum via Zoom, July 17
  16. MFDF Director Discussion Series - Open Forum (New York), July 23
  17. IMEA Portfolio Construction Roundtable, September 19
  18. MFDF Continuing Regulatory Impacts on Fund Boards program, October 15
  19. 2024 MMI Annual Conference, Oct 15-17
  20. IMEA Philanthropic Day, October 22
  21. IMEA Leadership Summit, October 23
  22. IMEA Star Awards Celebration, October 23
  23. IMEA Marketing Summit, October 24
  24. 5th Annual ETFGI Global ETFs Insight Summit, October 29
  25. MFDF Director Discussion Series - Open Forum (Denver), November 6
  26. MFDF webinar - Digital Assets in the Fund Space (part 2 of 2), November 7

©All rights reserved to InvestmentWires, Inc. 1997-2024
14 Wall Street | 20th Floor | New York, NY 10005 | P: 212-331-8968 | F: 212-331-8998
Privacy Policy :: Terms of Use