The SEC’s Division of Examinations just reminded every investor why the question of fiduciary duty matters more than ever: on June 9, 2026, regulators published a Risk Alert documenting the most common ways registered investment advisers (RIAs) fail to disclose economic conflicts of interest — and the list is longer than most clients expect.
What the SEC Found
Examiners identified three recurring patterns. First, cash sweep programs: many advisors recommended parking idle client cash in affiliated bank accounts that generate revenue for the advisor — without telling clients. Second, mutual fund share classes: advisors continued selecting share classes that pay 12b-1 fees to themselves or affiliates, even when cheaper share classes of the same fund were available. Third, billing errors: firms charged fees inconsistent with signed agreements, billed for services never rendered, and failed to issue promised refunds. The full analysis from Morrison Foerster summarizes the alert in detail.
Why This Matters Before You Hire an Advisor
The Risk Alert does not create new legal obligations — it is a transparency signal about where the industry keeps failing. For consumers, it is a practical checklist: ask your advisor whether they earn revenue from your cash holdings, how they select fund share classes, and whether their billing matches the engagement letter. A true fiduciary adviser is legally required to put your interests first and to disclose conflicts fully. Advisors who operate under a suitability standard are not held to the same bar. The SEC’s findings suggest the gap between what firms disclose and what they actually earn is still wide in 2026 — which is exactly the question regulators say they will keep examining through the rest of the fiscal year.
What to Do Now
Review your most recent account statement for line items you do not recognize. Ask your advisor whether their firm receives custodial credits, margin-loan rebates, or 12b-1 payments on any fund in your portfolio. If you cannot get a straight answer, that itself is a red flag. The SEC’s message is consistent: conflicts of interest are not illegal, but hiding them is.