RegAlert2019-09-30
Added · Updated
SEC Order Granting Waivers of Disqualification Provisions for Investment Advisers in the Share Class Selection Disclosure Initiative
The Securities and Exchange Commission grants waivers of disqualification provisions under Regulations A, D, E, and Crowdfunding to specific investment advisers participating in the Share Class Selection Disclosure Initiative. These waivers apply to the SCSD Investment Advisers listed in Appendix A, allowing them to maintain access to registration exemptions despite being subject to cease-and-desist orders for failing to disclose conflicts of interest related to 12b-1 fees. The Commission determined that good cause exists for these waivers based on the advisers' self-reporting and consent to standardized settlement terms. The order reserves the right to revoke or further condition the waivers if the advisers fail to comply with the terms of the SCSD Orders.
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UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
SECURITIES ACT OF 1933
Release No. 10712 / September 30, 2019
In the Matter of
Certain Investment
Advisers Participating in the Share Class
Selection
Disclosure Initiative,
Respondents.
ORDER UNDER RULES 262(b)(2),
506(d)(2)(ii), AND 602(e) OF THE
SECURITIES ACT OF 1933 AND RULE
503(b)(2) OF REGULATION
CROWDFUNDING GRANTING WAIVERS
OF THE DISQUALIFICATION
PROVISIONS OF RULES 262(b)(3),
506(d)(1)(iv), AND 602(c)(3) OF THE
SECURITIES ACT OF 1933, AND RULE
503(a)(4)(ii) OF REGULATION
CROWDFUNDING
I.
In February 2018, the Division of Enforcement (the “Division”) announced the Share Class Selection Disclosure Initiative (the “SCSD Initiative”), a self-reporting program designed to address potentially widespread violations of the federal securities laws resulting from investment advisers failing to make required disclosures relating to their selection of mutual fund share classes that paid the advisers (as dually registered broker-dealers) or their related entities or individuals a fee pursuant to Rule 12b-1 of the Investment Company Act of 1940 (“12b-1” fee) when a lower-cost share class for the same fund was available to clients. 1
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