Mutual Funds’ $9.5 Billion Cut Is Up for Grabs: Susan Antilla

The mutual fund industry raked in $9.5 billion from the esoteric sales charges known as 12b-1 fees in 2009, and that was a lousy year. In the headier markets of 2007, often-clueless investors forked over $13.3 billion in these misunderstood charges, which go mostly to line the pockets of brokers, not to manage investments.

The Securities and Exchange Commission said in a proposal last week that investors would be better-served if there were caps on some of those charges, if confirmation slips properly identify the levies as an “ongoing sales charge” rather than ill-defined “distribution” costs, and if customers are told how much they’re paying to fatten their brokers’ paychecks.