U.S. Bancorp Investments, a dually registered investment adviser and broker-dealer, has agreed to pay $16 million to settle Securities and Exchange Commission charges for breaches of fiduciary duty arising out of its mutual fund share-class selection practices.
The SEC administrative proceeding alleges that, from October 2012 through November 2017, U.S. Bancorp Investments (USBI) “purchased, recommended, and held for advisory clients mutual fund share classes that charged 12b-1 fees and shareholder servicing fees instead of lower-cost share classes of the same funds which were available to the clients. USBI failed to adequately disclose a conflict of interest related to these fees to its clients.” In doing so, the SEC alleges USBI “violated its duty to seek best execution for those transactions.”
