ORX News digest of the month – March 2019

  • 9 April 2019

Every month the ORX News team publishes a featured digest from the ORX News Service. It's a detailed look at one of the losses reported in the media that month, and is handpicked by the team as one of the most interesting stories.

Wells Fargo pays USD 17.4 million to investors through SEC share class initiative

On 11 March, the Securities and Exchange Commission announced that 79 investment advisors had agreed to return $125 million to clients, most of which were retail investors, through the regulator’s 2018 Share Class Selection Disclosure Initiative. Wells Fargo reached the largest settlement, totalling $17.4 million.

According to the initiative, the SEC’s Division of Enforcement agreed not to recommend fines for firms that self-reported federal securities law violations relating to mutual fund share class selection and that promptly compensated harmed clients.

The SEC found that the 79 firms had placed clients in certain mutual fund share classes when lower-cost share classes of the same fund were available, without adequately disclosing this. The firms also failed to disclose conflicts of interest related to the sale of these share classes, such as fees received by themselves in their capacities as brokers or by their broker-dealer affiliates and registered representatives.

ORX News subscribers can read the full story on the ORX News website.

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