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Regulatory Initiatives Target Revenue Sharing Arrangements in Mutual Fund Industry

February 18, 2004

By Investment Management Practice Group

Mutual fund companies engage in revenue sharing primarily as a means to compensate brokerdealers practice, also referred to as “pay-to-play,” a fund’s affiliates (typically its adviser) make payments to a broker-dealer in exchange for some type of preferential marketing treatment. Often this preferential treatment includes varying degrees of access to the broker-dealer and its sales force in order to educate and encourage them to sell the fund’s products over those of the fund’s competitors.

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