On July 13, 2016, the SEC’s Office of Compliance Inspections and Examinations (OCIE) announced its 2016 Share Class Initiative (the Initiative). The Initiative is focused on addressing the perceived risk that registered investment advisers may be providing conflicted advice to their clients when recommending investments in mutual fund share classes. For example, OCIE staff is concerned that an adviser may be conflicted because it may receive fees from the sales of certain more expensive mutual fund share classes which may incentivize the adviser to avoid recommending the lower cost share class, for which it does not receive compensation. The SEC views causing a client to purchase a more expensive share class when a less expensive class of that fund is available potentially as a violation of an adviser’s fiduciary duty and a failure to obtain best execution. The SEC has already brought a series of cases in this area.