SEC Votes to Scrap Mutual Fund '12b-1' Fees

The Securities and Exchange Commission plans to revamp fees that most mutual funds charge to cover sales and distribution costs.

Mutual Funds
Mutual Funds

So-called "12b-1" fees have come under criticism because they can cover a wide range of fund services, and they're confusing even to those in the industry.

The commission voted unanimously in Washington on Wednesday to adopt changes proposed by the SEC staff. The rules are subject to a 90-day comment period.

They include reducing the cap on how much a fund can charge.

Funds would be allowed to charge a "marketing and service" fee of up to 0.25 percent of a fund's assets per year.

And the 12b-1 name would no longer exist. It's a legacy of the rule that created 12b-1s three decades ago.