SEC Launches Disclosure Initiative to Encourage Self-Reporting
From the Desk of Jim Eccleston at Eccleston Law LLC:
The SEC's Division of Enforcement has implemented a self-reporting initiative for investment advisers which aims to protect advisory clients from undisclosed conflicts of interest.
Under the Share Class Selection Disclosure Initiative (SCSD Initiative), the SEC will recommend standardized, favorable settlement terms to investment advisers who self-report violations of the federal securities laws relating to certain mutual fund share class selection issues.
Moreover, under the SCSD Initiative, eligible advisers that participate in the SCSD Initiative and report undisclosed securities violations, also will be required to disgorge all ill-gotten gains and reimburse the harmed clients. However, the SEC will not impose any additional civil monetary penalty on advisers.
Notably, the SEC also has warned advisers that stronger sanctions will be imposed should they not take advantage of the SCSD Initiative.
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