SEC Regulatory Themes Update: 529 Plans, Advisory Account Fees, Mutual Fund Share Class Selection

As we push through the post-Labor Day sprint toward the close of 2025, we wanted to reach out with our annual check-in on the regulatory landscape. Think of this as your heads-up on what is keeping regulators busy and what might land on your desk.

529 Plans: Still Very Much on the SEC's Radar

We flagged this one last year, and it is not going anywhere yet. The SEC continues to dig into 529 Plan purchases, with active investigations and follow-ups happening right now. New settlements have not happened yet, but the Staff's thinking on remediation is starting to take shape. We are staying close to this and working with firms as it continues to unfold.

Advisory Fee Miscalculations: Getting the Details Right

Another priority from 2024 that remains front and center. The core issue? Fees billed in advance where accounts terminate mid-period, and the excess fee amounts never make it back to clients. But the challenges extend beyond that, we are seeing mechanical problems around billable value calculations, tiered fee schedules that are
applied incorrectly, householding errors, and mishandled intra-period adjustments. If there are illiquid assets in the mix, valuation questions are also drawing attention.

Mutual Fund Share Class Selection: Back in the Spotlight

With changes in the Executive Branch comes a shift at the SEC, and we are seeing renewed focus on mutual fund share class selection, particularly where retail investors may be disadvantaged. We have been helping clients navigate this since 2018, so we understand how these inquiries develop and what regulators are actually looking for.

Next Steps

If you are seeing any of these themes, we would love to talk about how we can support you. We have guided clients through these cycles before and can help you get ahead of what is coming or respond effectively if it is already at your door.

For more information, please check out our dedicated Share Class page, or our prior reporting on:

The SEC’s Self Reporting Initiative

• SEC Self Reporting
• Revenue Sharing

FINRA’s 529 Plan Account Initiative

• FINRA 529 Plans
• Challenges

SEC Revenue Sharing Investigations

FINRA’s Rights of Reinstatement Investigations

• FINRA ROR – Systems
• Policies
• 3 Years Later

This piece asking if past is prologue when it comes to share class issues.

As the industry continues to face regulatory inquiries and second-guessing along a variety of fronts, Bates Group stands ready to assist its clients and their counsel with its extensive data analytics and investigation support capabilities.

Connect with a Bates Group leader to learn more. We welcome the opportunity to further discuss our expertise in this area.