Jessica Reece Shares Insight Into SEC Exam Priorities

The Securities and Exchange Commission released examination priorities, and consultants say they are investigating whether 12b-1 fees are being appropriately handled during the process of converting mutual funds to ETFs.

Asset management partner Jessica Reece told Ignites, “firms with co-investment structures need to determine whether conflicts can be managed through disclosure or whether they need to be outright eliminated.”

As in other areas of the capital markets, the SEC is focused on process as well as outcome. “Advisors need to be so thoughtful about what their processes are because it’s not just the outcome that matters,” she added. “Two advisors, two boards, can come to two different conclusions on a very different set of facts and both might not necessarily be wrong, but what matters is process.”

Overall, the SEC under Chair Gary Gensler is focused on retail investor access to “the proliferation of new investment products that just look different than even in the recent past,” said Jessica.