In regulatory guidance published on January 6, 2016, the SEC’s Division of Investment Management tackled the knotty issue of how mutual funds, their investment advisers and independent fund directors should evaluate arrangements involving mutual fund distribution and sub-accounting fees.

SUMMARY -

In a nutshell, the Division’s staff urges fund boards to establish a robust process for evaluating and approving sub-accounting arrangements, and to ensure that funds establish compliance policies and procedures for reviewing and identifying any payments that are made for distribution-related services and that are not paid by a Rule 12b-1 distribution plan.