For the first time, an SEC judge has set some limits on what expenses a mutual fund can include as part of its Rule 12b-1 fee.

Judge Brenda P. Murray has ruled that costs for recruiting personnel, and, in some cases custodial, transfer agent and accounting fees can not be counted as marketing expenses and included under Rule 12b-1 of the Investment Company Act. Murray's 51-page decision dated April 1 marks the first time the SEC has found that a mutual fund adviser used Rule 12b-1 fees improperly, said John S. Yun, the lawyer who led the SEC's prosecution of the case.

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.