The Securities and Exchange Commission on Monday announced settled charges against 17 investment advisory firms for disclosure failures regarding their mutual fund share class selection practices.

The firms include 16 advisers that self-reported as part of the Division of Enforcement’s Share Class Selection Disclosure Initiative (SCSD) and were, thus, not required to pay civil penalties. One adviser that did not self-report was ordered to pay a $300,000 civil penalty.

As part of the initiative announced in February 2018, the Division of Enforcement agreed that for eligible firms that self-reported by the deadline, the Division would recommend standardized settlement terms to the Commission, including that the Commission not impose a civil penalty. On March 11, 2019, the SEC instituted actions against 79 advisers that participated in the initiative, ordering the payment of over $125 million in disgorgement and prejudgment interest to investors.

On Monday, the Commission issued orders against 16 additional advisers that self-reported as part of the initiative, bringing the total amount ordered to be returned to investors to over $135 million.

Mid Atlantic Financial Management, which was eligible to self-report as part of the initiative but did not, received a civil penalty. According to the SEC’s order, Mid Atlantic, whose affiliate received 12b-1 fees, failed to fully disclose the conflicts arising from its selection of more expensive mutual fund share classes for clients when lower-cost share classes for the same fund were available.

Among other things, the SEC ordered Mid Atlantic to pay over $1 million in disgorgement and prejudgment interest. Unlike the firms that self-reported as part of the initiative, however, the Commission also ordered Mid Atlantic to pay a civil monetary penalty.

“Today’s actions reaffirm the benefits to advisers and their clients for self-reporting as part of the Initiative,” said C. Dabney O’Riordan, co-chief of the Asset Management Unit. “They also demonstrate the Commission’s commitment to holding advisers accountable for selecting more expensive investments that eat away at their clients’ investment returns without proper disclosure.”

The SEC’s orders find the 16 self-reporting firms violated Section 206(2) of the Investment Advisers Act of 1940 and ordered that they are censured; that they cease and desist from future violations; that they pay disgorgement and prejudgment interest totaling nearly $10 million; and that they comply with certain undertakings, including returning the money to investors.