Investment advisers face renewed and intensifying scrutiny from the Securities and Exchange Commission over how they identify, mitigate, and disclose economic conflicts of interest. The SEC Division of Examinations' Risk Alert issued on June 9, 2026, reinforced by a series of recent enforcement actions, makes clear that conflicts management and disclosure remain a top examination and enforcement priority. For advisers, this convergence of examination guidance and enforcement activity underscores the need to revisit fee, billing, and disclosure practices without delay.
The Risk Alert and related enforcement matters point to a set of recurring deficiencies that continue to surface across the industry. Chief among these are undisclosed Rule 12b-1 fee arrangements, in which advisers receive compensation tied to particular share classes without adequately informing clients of the resulting economic incentives. The SEC has also flagged billing practices that diverge from the express terms of advisory agreements, including fee calculations, timing, and application of discounts that do not align with what clients were told they would receive. Rounding out the pattern is inadequate disclosure of economic benefits tied to custodial credits and transaction markups, where advisers derive value from arrangements that may not be transparently reflected in client-facing disclosures or Form ADV.
Taken together, these areas of focus signal that the SEC expects advisers to look beyond broad, boilerplate acknowledgements of conflicts and instead deliver specific, accurate, and current disclosures that allow clients to understand the economic incentives at play. Firms should promptly audit their fee structures against advisory agreements and actual billing outputs, examine any revenue-sharing or credit arrangements with custodians and broker-dealers, and confirm that Form ADV and other disclosure documents fairly describe each material economic conflict. Written policies and procedures should be updated to reinforce these controls, and compliance and supervisory personnel should be prepared to demonstrate how conflicts are identified, mitigated, and documented on an ongoing basis. Proactive remediation now can reduce the risk of examination findings, deficiency letters, and, in more serious cases, enforcement exposure.
This alert is for general informational purposes only and does not constitute legal advice. Advisers should consult qualified counsel regarding their particular facts, obligations, and compliance programs.