News & Events

Corporate Partner Rajib Chanda was quoted in Ignites, a Financial Times news service, with regard to recent SEC guidance related to the Department of Labor’s fiduciary rule, which will likely necessitate changes to mutual fund share-class structures and sales loads. The guidance provides two paths for share-class structure, the first of which allows firms to add an appendix to the fund prospectus that lists sales loads and explains how to use the appendix and the second of which discusses the launch of new share classes that are each tailored to a specific distributor. With the issuance of the guidance, the SEC made clear their positive stance on using an appendix, and Rajib noted that “everybody who decides to use this approach has a clear path.” Although the guidance provides clear direction and mitigates the issue of firms filing in multiple ways, some firms may not be comfortable with filing an appendix due to transparency issues. Rajib cites the concerns of intermediaries in having “their fee schedule compared to all of their competitors,” but also notes that registering multiple new share classes would raise the issue of having “[an] alphabet soup of share classes.”