Ameriprise recommended Class A shares with front-loaded sales charges, or Class B and Class C shares with trails, when customers were eligible for load-waived Class A shares. The SEC says Ameriprise did not ascertain whether the clients were eligible for the waived sales fees and did not disclose that the higher sales loads would negatively impact investment returns.

Class A share often include a sales charge at the point of purchase and ongoing 12b-1 fees. Class B and C shares don't have up-front sales loads, but come with higher trailing 12b-1 fees. Many mutual funds provide sales load waivers for Class A shares sold to qualified retirement accounts, according to the SEC.

The SEC says Ameriprise cooperated with investigators, voluntarily identifying affected accounts, and issuing reimbursements with interest payments. The firm also converted eligible customers to lower-cost share classes, free of charge.

"Ameriprise generated greater revenue for itself but lower returns for its retirement account customers by recommending higher-fee share classes," said Anthony S. Kelly, co-chief of the SEC Enforcement Division's Asset Management Unit.

The administrative action was brought under provisions of the Securities Act of 1933 and the Investment Advisers Act of 1940. Ameriprise consented to the fine, a cease-and-desist order, and a censure without admitting or denying guilt.

In recent years, the SEC has charged nine other firms for failing to disclose conflicts of interests on the sales of higher-cost mutual fund shares.

The Investment Advisers Act of 1940 imposes a fiduciary duty on investment advisers registered with the SEC, which includes full disclosure of conflicts of interest, including commissions and fees on mutual funds.

This month, the SEC announced the creation of the Share Class Selection Disclosure Initiative, which allows advisory firms to avoid financial penalties if they self-report violations of the best-interest standard when recommending share classes on mutual funds. Under the program, firms must promptly return money to harmed clients to avoid penalties from the SEC.

The SEC's action against Ameriprise, and the creation of the SCSD Initiative, is evidence the agency is making investor protections in the retail market–specifically with respect to share-class recommendations–a top priority, according to Mr. Kelly of the SEC.

Duane Thompson, senior policy analyst at Fi360, a compliance consultancy, said the SEC and other regulators have been focusing on excessive fees for a number of years. The SEC's Office of Compliance and Inspections and Examinations has made mutual fund recommendations an exam priority for 2018.

But the SCSD Initiative is unprecedented, said Thompson.

"I've never seen anything like this before, and I've been following the SEC for 20 years," Thompson told BenefitsPRO. "The SEC is sounding really tough on this issue."

Of the roughly 290,000 registered advisors throughout the country, about 80 percent are dually registered as broker-dealers, making them eligible for commissions and 12b-1 fees.

"It's likely quite a few of them have had fuzzy disclosures, and many may owe considerable money to clients," said Thompson. The SCSD Initiative requires reimbursement of excessive fees tracking back to 2014. Corrective payments are based off commissions and fees that exceeded what should have been prudent share class recommendations.

The SEC says fees and potential conflicts of interest must be disclosed on Form ADV filings.

Many advisors and dually registered representatives rely heavily on the ADV disclosure, says Thompson. But the forms are notorious for not being read by investors. The SEC has said Form ADV disclosures may not be sufficient to meet disclosure requirements.

"I expect there to be a good number of new self reporting under the new initiative," said