Two trade organizations have taken advantage of the SEC's comment period on what should be done about the 12b-1 fee.

ICI and SIFMA submitted their comment letters to the SEC this week in defense of the fee. Both believe that an outright revocation or significant curtailment of the fee would have a negative impact on the mutual fund industry.

In a letter penned by the ICI's acting general counsel, Mary Podesta, the ICI described the 12b-1 fee as "an integral part of the structure and success of the mutual fund industry."

The ICI is against any significant change to the fee structure but concedes that some re-tooling could be done to fee disclosure.

"To improve investor awareness and understanding of 12b-1 fees and other fund fees and expenses, the SEC should consider improving the disclosure provided to investors both by the fund in its disclosure documents and by the intermediary at the point of sale," Podesta wrote.

SIFMA's letter, written by their general counsel and senior managing director, Ira Hammerman, took the same pro 12b-1 fee view as the ICI.

The letter cited information from a SIFMA white paper to explain the group's view: "Rule 12b-1 has been a success; curtailing or withdrawing the rule would harm investors and competition in the marketplace. Similarly, other fee arrangements have fostered innovation and supported higher levels of services."

SIFMA also agrees with the ICI when it comes to what should be done to 12b-1, suggesting better disclosure is all that is needed.

Both trade organizations agree that smaller fund firms are the ones that would be most affected if the the 12b-1 fee were to be abolished, as it levels the playing field between them and their larger competitors.  

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