The SEC's Office of Compliance Inspections and Examinations isundertaking an initiative to address the risk that registered advisers may be makingcertain conflicted investment recommendations to their clients.
Specifically, the office seeks to identify conflicts of interesttied to advisers' compensation or financial incentives for recommending mutual fundand 529 plan share classes that have substantial loads or distribution fees.
Examiners will review advisers' books and records to identifyshare classes held and purchased in clients' accounts and any compensation receivedby the adviser or any of its associated persons related to such investments.
The initiative, which applies to investment advisers, comes asthe Department of Labor's Conflict of Interest Rule, which affects retirement and financial advisers, faceslegal challenges. Thefiduciary rule takes effect in April 2017.