June 12 is the deadline for advisors to self-report infractions in charging for mutual fund share classes, including possible overcharges, said the Securities and Exchange Commission’s Division of Enforcement. The division has issued answers to the most frequently asked questions (FAQs) the agency is getting from investment advisors who believe they’ve overcharged investors.

The new FAQs explain the finer points of advisor eligibility, disgorgement and reimbursement to clients under the SEC’s Share Class Selection Disclosure (SCSD) Initiative, announced on February 12. The initiative encourages advisors to protect advisory clients from undisclosed conflicts of interest by self-reporting transgressions to the SEC and reimbursing customers who have been overcharged through 12b-1 fees when other, less expensive share classes of the same mutual funds were available.

“It appears that many investment advisors are working diligently to evaluate whether they can take advantage of the initiative, and we believe that providing these FAQs will help them make that determination,” said C. Dabney O’Riordan, co-chief of the SEC Division of Enforcement’s Asset Management Unit. “The initiative provides a framework to quickly and efficiently resolve these issues with self-reporting advisors and return money to their clients.”

Under the SCSD Initiative, the Enforcement Division will recommend standardized, favorable settlement terms to investment advisors who self-report that they failed to disclose conflicts of interest associated with their receipt of 12b-1 fees, (or fees charged by affiliates or supervised persons).

The division in those cases will recommend settlements that don’t impose a civil monetary penalty but require participating advisors to return ill-gotten gains to harmed advisory clients, the SEC said.

According to the new FAQs, examples of overcharges that would require an advisor to self-report under the initiative include these scenarios:

The SEC said it does not anticipate extending the June 12 deadline for self-reporting.