The Many Faces of Mutual Fund Revenue Sharing

Abstract:     
The objective of this study is to take some of the mystery out of mutual fund revenue sharing, but without being able to say that investors have transparent disclosure. Topics begin with the transition from directed brokerage to revenue sharing. The discussions that follow include directed brokerage and revenue sharing; revenue sharing nuances; revenue sharing issues; distribution with a difference; types of revenue sharing payments; pension plan sub-transfer agency fees; disclosure issues; 12b-1 fees, defensive 12b-1 plans, and revenue sharing; Schwab revenue sharing; SEC versus Edward D. Jones; and Morgan Stanley distribution fees.

It appears that most in the world of regulation and practice of revenue sharing lacks clarity, consistency, proper redress and investor transparency, such as the "direct distribution" of fund adviser revenue sharing payments from fund adviser "profits."

Number of Pages in PDF File: 55

Keywords: mutual funds, directed brokerage, revenue sharing, 12b-1 fees, direct distribution, indirect distribution, defensive 12b-1 plans, courts and excessive fees, regulation

JEL Classification: G2, G23, G28

working papers series