September 21 2015- Washington DC
First Eagle Investment Management and FEF Distributors was charged by the US Securities and Exchange Commission with improperly using mutual fund assets to pay for the marketing and distribution of fund shares, according to a SEC Press Release.
The SEC alleges that First Eagle and FEF Distributors unlawfully caused First Eagle Funds to pay $25 million for distribution costs rather than making the payments from the company’s assets.
“First Eagle and FEF inappropriately used money belonging to the shareholders of the funds to pay for services clearly intended to market the funds and distribute their shares,” said Andrew J. Ceresney, Director of the SEC’s Enforcement Division. “Unless part of a 12b-1 plan, the firm should bear those costs, not the shareholders.”
“Mutual fund advisers have a fiduciary duty to manage the conflict of interest associated with fund distribution, namely whether to use their own assets or to recommend to their fund’s board to use the fund’s assets to distribute shares,” said Julie M. Riewe, Co-Chief of the SEC Enforcement Division’s Asset Management Unit. “First Eagle breached that fiduciary duty by using the funds’ assets rather than its own money to pay for distribution and failed to provide accurate information to the funds’ boards.”
Rex Securities Law , with offices in Boca Raton, FL, and Austin, TX, provides representation to investors nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney.
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