Beginning in 2003, the SEC and state officials brought enforcement actions against two improper trading practices involving mutual fund. In many cases, the SEC and state regulators have obtained settlements that require payments, including amounts characterized as penalties rather than compensation, to be paid to the mutual fund shareholders who were harmed by the improper practices. These settlements were put into what the SEC call “fair funds” to compensate investors who were harmed by the violation. A list of the Fair Funds can be found on the SEC website.

For each fair fund, the SEC has appointed an independent distribution consultant (IDC) to establish a plan to distribute the monies from the settlement fund to the shareholders of the relevant mutual fund or series of funds harmed by the late trading or market timing. A proposed distribution plans are published on the SEC website and there is typically a 30 day comment period following publication. The SEC is to finalize these distribution plans within 30 days after the comment period closes, but may extend the period.