New Guidance on Disclosure Obligations for Investment Advisers: Compensation and Conflicts

By Eric Mikkelson and Abraham Sotelo

The Securities and Exchange Commission's (SEC) Division of Investment Management published new guidance in the form of Frequently Asked Questions on October 18, 2019. The FAQ focused on investment advisor disclosure obligations to clients related to various forms of direct and indirect compensation, and the related conflicts of interest such compensation can create for the advisers. The FAQ provides specific examples with respect to 12b-1 fees, revenue-sharing and mutual fund share classes, among other specific sample disclosures. The FAQ also provides more broadly applicable compensation-related conflict disclosure and mitigation recommendations to help advisers comply with their fiduciary obligations.

View the full text of FAQ. 

View a summary of the FAQ.

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