Under the SEC’s new initiative, self-reporting firms need to reimburse clients for any gains lost by putting them in high-cost shares. However, civil fines will be waived.
For investors, the SEC scrutiny is a good reminder that when it comes to the cost of your investments — which directly impact your profits — it’s worth making sure you understand the cost of your mutual fund shares, what fees you are paying and why.
The average expense ratio across all mutual funds is 1.08 percent, according to Morningstar, a market research firm.
The SEC also is warning firms that if they don’t notify the agency of their intent to self-report by June 12, they can expect stiffer sanctions if misconduct is discovered down the road.
“There’s a good chance your advisor’s company already has taken steps to fix this problem,” Lundy said.
“Investors should always be asking about fees and costs and why they are being put in one program or fund vs. another,” he said.
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