an issuer for the sale of certain securities, this commission and the amount of the commission may pose an incentive for the bank to allow itself to be swayed when providing investment advice to the client. The client’s interest could thus be subordinated to the bank’s interest in selling the security. Missing disclosure of the inducements Another point of criticism is that banks and asset managers for years failed to disclose the amount of retrocessions received. Many banks and asset managers received retrocessions in addition to the fees charged without informing their clients sufficiently. Some made their clients sign waivers, without informing them, for what exactly they are signing the waivers for. The Swiss Federal Supreme Court (FSC 137 III 393) decided that an asset manager is entitled to retain retrocessions and other distribution fees received only if three rules are met: Firstly, the client has to be informed about retrocessions by defining the parameters based on which the retrocessions are calculated, and a range of the expected compensation, expressed as a percentage of the assets under management, has to be provided and has to be put into perspective with the management fees. Secondly, once the client is informed about the amount of retrocessions the asset manager will receive, the client has to sign a valid and comprehensive waiver based on the informed consent. And thirdly, the client must be informed about the risks that arise out of a conflict of interest generated by retrocessions and the measures taken by the asset manager to avoid or mitigate them. The legislation and rules is similar in other countries. However, as most banks and asset managers have not informed their clients sufficiently about the retrocessions generated, many clients have the right to assert their claims on retrocessions. Independent of performance Retrocessions are usually not paid out or received based on the performance of the financial product; this means that even if the client's portfolio showed a negative performance, asset managers still received on the one hand their contractually agreed banking fees from the clients and on the other hand, retrocessions worth between 0.5 – 2% of the assets under management. Argumentation in favour of retrocessions Banks and asset managers argue that without retrocession fees the substantial charges would have to be made to the client in order to pay for the ongoing service that the bank provides today mostly free of charge.