NASD Notice to Members 96-84 - December 1996

NASD Regulation Solicits Comment on the Use of Bond Mutual Fund Risk Ratings in Supplemental Sales Literature; Comment Period Expires February 24, 1997

Executive Summary 

NASD Regulation, Inc. (NASD Regulation) requests comment on the use by NASD® members (securities broker/ dealer firms) and their associated persons of bond mutual fund risk ratings in sales literature given to customers. In particular, NASD Regulation is seeking comment on whether it should continue to prohibit the use of bond mutual fund risk ratings by members and their associated persons. In addressing this issue, commenters are asked to consider whether, with certain required disclosures or other adjustments, such ratings would in fact provide useful information to investors. NASD Regulation requests that NASD members, investors, and others, in considering their responses and comments, focus in particular on the need on the one hand to provide investors with as much useful information as possible to make informed investment decisions, and the concern on the other hand that certain information, depending on its availability or how it is produced or presented, may have the potential of being misleading or deceptive or otherwise lend itself to abuse.