Shelf space payments where mutual fund companies pay to get access on a particular 401(k) custodial platform is a trending topic. The payments made are for access and if you don’t pay if you’re a mutual fund company, you don’t play.
Many pay for play schemes are illegal such as the music payola scandal in the 1950s and the reason that was illegal because a law was passed to make it so. Until Congress says something or the SEC or Department of Labor does something in the rulemaking realm, shelf space payments are legal. Whether participants are harmed in these type of arrangements will probably be decided in the courts through litigation.
It will be some time before it’s decided whether shelf space payments are a growing trend or a dying trend, thanks to new rules being place on them.
