On January 6, the staff of the Securities and Exchange Commission's (SEC's) Division of Investment Management issued Guidance Update 2016-01, "Mutual Fund Distribution And Sub-Accounting Fees" (the "Guidance"). The Guidance outlines the staff's views on issues that may arise when registered open-end investment companies ("mutual funds" or "funds") make payments to financial intermediaries that provide shareholder and recordkeeping services (so-called sub-administrative and sub-transfer agency services) for investors whose shares are held in omnibus and networked accounts maintained with mutual funds. In particular, the Guidance addresses whether a portion of those payments are being used to finance distribution and therefore, if paid by a fund, must be paid pursuant to rule 12b-1 under the Investment Company Act (the "1940 Act").
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