OK, time to give credit where it's due -- at least a little of it.

Though it took a high-voltage shock to the system (in the form of Eliot Spitzer's investigation of trading improprieties at scads of fund families), the Securities and Exchange Commission seems to have finally gotten religion on the topic of fund industry reform. No, really.

Along with Spitzer's office, the SEC has slapped fines on the likes of Alliance Capital (NYSE:AC), Bank of America (NYSE:BAC), and FleetBoston (NYSE:FBF). Additionally, the commission is taking a cold hard look at 12b-1 marketing fees and considering whether to require funds to impose mandatory redemption fees on short-term traders. It's enough to make you wonder if maybe SEC Chairman Bill Donaldson has been reading Champion Funds, the new Fool service designed to help you make heads and tails of the scandal-ridden mutual fund industry.

But wait, it gets even better. Now comes an indication that the SEC is looking to clamp down on the financial incentives that some fund shops give to brokers in exchange for pushing their funds. Most objective observers would agree that such a cozy financial arrangement represents a clear conflict of interest. Brokers, after all, should provide advice based on their assessment of their clients' needs, not on which fund company has greased their palms.

Unfortunately, such incentives are legal -- at least so long as they're adequately disclosed.

And that's where the SEC comes in: In November 2003, Morgan Stanley ponied up a cool $50 million for failing to adequately disclose that it had been paid to provide "shelf space" for certain mutual funds. And on Wednesday, the SEC announced that Boston-based money manager MFS would fork over $50 million for doing a poor job of acknowledging that it had been providing such incentives to brokers.

To be sure, the fines here could certainly be stiffer. But the action this week against MFS represents the first time a fund shop has been called on the carpet for this particular practice, a rare instance of the SEC beating Spitzer to the punch on a matter related to fund industry improprieties.

In settling, MFS didn't admit wrongdoing, but the fact that the shop is paying the fine speaks volumes. And so does this none-too-cryptic remark from Stephen Cutler, director of the SEC's enforcement division. "The Commission continues to investigate whether the managers of other mutual funds and the brokerage firms that sold those funds have similarly failed to disclose such conflicts."

In other words, look out, fiduciaries: The hunt is on.

Shannon Zimmerman, editor and analyst of Motley Fool Champion Funds, doesn't own shares of any companies mentioned in this article, but he does own a pretty large collection of vintage 8-tracks.