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FINRA

 

FOR RELEASE:
CONTACTS:
Thursday, November 17, 2004
Nancy Condon 202-728-8379
Herb Perone 202-728-8464

 



NASD Mutual Fund Task Force Submits Recommendations on Soft Dollars, Portfolio Transaction Costs To SEC

Washington, DC – NASD has submitted the first set of recommendations by its recently appointed Mutual Fund Task Force to the Securities and Exchange Commission.


Chaired by NASD Chairman & CEO Robert R. Glauber, the task force’s 20 other members represent a cross-section of the broker-dealer and investment company industries. The task force was named last May to help inform SEC rule proposals regarding mutual fund cost disclosure and distribution arrangements.

 

The Report of the Mutual Fund Task Force on Soft Dollars and Portfolio Transaction Costs represents the conclusion of the first phase of the task force’s work. Among its recommendations are: 

  • Narrowing the types of research services that may be obtained with soft dollars;
  • Expanding the disclosure in fund prospectuses about soft dollar practices and portfolio transaction costs;
  • Providing more explicit guidance about the types of information that fund boards should receive about soft dollar practices and portfolio transaction costs; and 
  • Considering soft dollar issues raised by other managed advisory accounts, such as hedge funds.

“When a mutual fund advisor obtains research with soft dollar commissions, it’s important that the benefits all go to investors and not to the advisor,” Glauber said. “The Task Force’s recommendations limit research activities bought with soft dollars to those that clearly benefit investors and require that advisors give more complete information on soft dollar practices to fund boards.  These changes will help protect investors and are in the interest of the mutual fund industry. ”The second phase of the task force’s assignment, which will focus on mutual fund distribution arrangements, is expected to take several months to complete. 
 

NASD is the leading private-sector provider of financial regulatory services, dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services. NASD touches virtually every aspect of the securities business—from registering and educating all industry participants, to examining securities firms, enforcing both NASD rules and the federal securities laws, and administering the largest dispute resolution forum for investors and registered firms. For more information, please visit our Web Site at www.nasd.com.