Broker compensation deals among mutual funds are attracting more intense regulatory scrutiny for possible conflicts of interest as the $7 trillion mutual fund industry remains on the defensive.

Steering brokerage commissions to securities firms that sell a fund company's proprietary funds or that bring in new clients has been a longstanding practice at many fund shops. However, firms whose funds are sold through brokers and financial planners may find themselves in regulators' crosshairs for soft-dollar arrangements and other such questionable pay deals. One company, mutual fund giant MFS Investments of Boston, has temporarily suspended these so-called "quid pro quo" arrangements, according to a New York Times report last week.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.