SEC plan to encourage broker research of funds sparks Morningstar-Fidelity conflict

1 August 2018 9:02am
A US Securities and Exchange Commission proposal to encourage more research for investors on mutual funds is pitting a leading independent researcher against the fund sector over a conflict-of-interest provision.

Morningstar, the Chicago-based researcher, argued that a proposal to lower brokers' legal barriers to publishing fund research would continue to permit reports that benefit firms financially. The proposal should include requirements aimed at eliminating or mitigating broker conflicts of interest, rather than merely extending the current requirement that such conflicts be disclosed, Morningstar contends.

“We do not believe inviting broker/dealers to put out biased research (as long as they disclose the bias) will best serve investors,” Morningstar’s policy research director, Aron Szapiro, wrote to the SEC.