NASD Notice to Members 96-68 - October 1996

NASD Solicits Member Comment on Proposed Rules Relating to Prospectus Disclosure of Cash and Non-Cash Compensation for the Sale of Investment Company Securities

Executive Summary

The NASD requests member comment on proposed amendments to Rule 2830 (formerly Article III, Section 26 of the NASD® Rules of Fair Practice) of the NASD's Conduct Rules (Investment Company Rule) that would: (1) expand the current definitions of cash compensation and non-cash compensation, (2) revise the current prospectus disclosure provisions to prohibit a member from participating in the sale of investment company securities or providing services to an offeror of such securities unless the cash or non-cash compensation that is or may be received by the member or its associated persons is described in a current prospectus of the investment company, and (3) provide specific guidance regarding what must be disclosed and where in the prospectus the disclosure must be located.

 

Questions concerning this Notice should be directed to R. Clark Hooper, Senior Vice President, Office of Disclosure and Investor Protection, NASD Regulation, at (202) 728-8325; or Robert J. Smith, Senior Attorney, Office of General Counsel, NASD Regulation, at (202) 728-8176.