NASD Notice to Members 06-48 - September 2006

SEC Approves Amendments to NASD Rules 2210 and 2211 to Require Disclosure of Fees and Expenses in Mutual Fund Performance Sales Material; Effective Date: April 1, 2007

Executive Summary

On July 5, 2006, the Securities and Exchange Commission (SEC) approved amendments to NASD Rules 2210 and 2211 that impose certain disclosure and presentation requirements on member communications with the public, other than institutional sales material and public appearances, that present non-money market mutual fund performance data (performance sales material).1 Such communications must disclose: (1) the standardized performance information mandated by Rule 482 under the Securities Act of 1933 (Rule 482) and Rule 34b-1 under the Investment Company Act of 1940 (Rule 34b-1); and (2) to the extent applicable, the fund's maximum front-end or back-end sales charge and annual operating expense ratio. The rule requires that all of this information be presented prominently and, in any print advertisement, in a prominent text box.

 

The effective date of this rule change is April 1, 2007. Included with this Notice is Attachment A (text of rule amendments).

 

Questions or comments concerning this Notice may be directed to Joseph P. Savage, Associate Vice President, Investment Companies Regulation, Regulatory Policy and Oversight (RPO), at (240) 386-4534; or Philip A. Shaikun, Associate Vice President and Associate General Counsel, Office of General Counsel, RPO, at (202) 728-8451.

 

1 SEC Rel. No. 34-54103 (July 5, 2006), 71 Fed. Reg. 39379 (July 12, 2006) (File No. SR-NASD-2004-043).

 

This Notice has been updated to correct the rule reference at the top of page 4 to 2210(d)(3)(B).