Market efficiency will likely stamp out a fund provider’s ambitions to charge 12b-1 fees since any provider that would add the fee will probably find themselves with less liquidity as investors shop for other low-cost options. The universal forces of supply and demand will keep the costs down.
Furthermore, Securities and Exchange Commission chairman Mary Schapiro has already shown her dislike of the practice, and doing away with the 12b-1 rule, along with making major changes to disclose the source of fees, is on the top of the SEC’s to-do-list.
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Max Chen contributed to this article.