BISYS reached a settlement with the Securities and Exchange Commission for $21.4 million on charges it rebated more than $230 million in fees to 27 fund companies over a period of five years to keep them as clients.

As part of the settlement, BISYS agreed to hire an independent consultant to review its policies.

Although BISYS has put this matter to rest, there is speculation that the SEC might now go after the fund companies that accepted the money and spent it on marketing and other business-related expenses, such as seed money for new funds, without disclosing that to their fund boards or shareholders.

"This is yet another example of indisclosed conflicts of interest and breaches of fiduciary duty in the mutual fund industry," said Randall Lee, Pacific regional director for the SEC. "These secret agreements placed the interests of BISYS and investment advisors above those of ordinary mutual fund investors."

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