The Securities and Exchange Commission (SEC) is cracking down on the mutual fund and exchange traded fund (ETF) industry. The target of its ire: 12(b)-1 fees.

SEC Chairman Mary Schapiro says that they will begin to move on the issue of 12(b)-1 fees collected by brokers this year, reports Sara Hansard for InvestmentNews.

12b-1 fees are a way for fund companies to pass on the costs of marketing, record-keeping and commissions to the investor. The fees are capped at 0.25%, and the investor could keep on paying the fee as long as the fund is held. [What are 12(b)-1 fees?]

Schapiro commented that “the problem is that investors may have no idea these fees are being deducted, what services they are paying for or who they are ultimately compensating.” Brokers have been collecting around $13 billion a year in such fees.

The SEC may also include a point-of-sale-disclosure proposal that would require brokers to provide information about securities products and services, and brokerage compensation at the time a person is thinking about making an investment.

For more information on ETFs and taxes, visit our taxes category.

Max Chen contributed to this article.

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