More than 50 investment advisers are under pressure to settle federal claims they steered customers to mutual funds that charged excessive fees, the Wall Street Journal reported. The Securities and Exchange Commission’s civil enforcement campaign to limit the fee-steering practice has unnerved Wall Street firms and smaller financial advisers, the people said. Money managers have been caught off guard by the extent of the investigations, initially announced in February 2018. The SEC at the time asked investment advisers to voluntarily report cases in which they may have overcharged clients, in exchange for paying lower fines. The initiative followed about a dozen enforcement actions since late 2017 targeting excessive fees, including ones against SunTrust Investments Services Inc. and PNC Investments LLC. The companies didn’t admit or deny the claims but agreed to pay back over $16 million in fees to clients or the government. In the new investigations, the SEC is pushing numerous firms to settle civil-fraud charges by Friday. The cases involve ongoing fees, known as 12b-1 charges, that are levied against investor assets and used to reward financial advisers who sell mutual funds. The fees sometimes are shared with investment advisers who manage portfolios for clients. Investment advisers are supposed to disclose if there are versions of the same fund that don’t impose those fees, according to the SEC. The fees have become unpopular in recent years, with more investors choosing cheaper index funds and others opting for accounts that can avoid the fees.
