Key takeaways

• The SEC has announced an initiative that will allow investment advisers to avoid a civil penalty if they self-report failures to disclose conflicts of interest in selecting or recommending mutual fund share classes.
• Advisers that recommend to clients share classes with 12b-1 fees should immediately consult with experienced SEC counsel to evaluate whether current conflicts disclosures are inadequate in light of the advisers’ share class recommendation practices.
• An adviser’s decision whether to self-report under the SCSD Initiative should consider whether the settlement will trigger any collateral consequences.