NASD Notice to Members 05-40 - June 2005

NASD Requests Comment on Proposal to Prohibit All Product-Specific Sales Contests and to Apply Non-Cash Compensation Rules to Sales of All Securities; Comment Period Expired August 5, 2005

Executive Summary

NASD currently restricts the payment and acceptance of non-cash compensation in connection with the sale of direct participation programs (DPPs), variable insurance contracts, investment company securities, and public offerings of real estate investment trusts (REITs) and other securities. NASD also prohibits internal non-cash sales contests in connection with the sale of variable insurance contracts or investment company securities unless they meet certain criteria, including that such contests are based on principles of total production and equal weighting. NASD proposes to expand the prohibitions of non-cash compensation to the sale and distribution of any security or type of security, rather than just those enumerated above. NASD also proposes to prohibit all product-specific cash and non-cash "sales contests" as defined by the proposed rule.


Questions concerning this Notice may be directed to Thomas M. Selman, Senior Vice President, Investment Companies/Corporate Financing, at (240) 386-4533; Joseph P. Savage, Associate Vice President, Investment Companies Regulation, at (240) 386-4534; or Philip A. Shaikun, Associate General Counsel, Office of General Counsel, Regulatory Policy and Oversight, at (202) 728-8451.

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The views, expressions, findings and opinions expressed in the comments on this Web page are solely those of the author(s) and FINRA accepts no responsibility for the content of the comments.

Comments By Date Received
Carty & Company, Inc. (PDF 44 KB) 5/10/2005
Mutual Trust Co. of America Securities (PDF 34 KB) 6/24/2005
United Securities Alliance, Inc. (PDF 30 KB) 7/18/2005
Interactive Planning Corp. (PDF 30 KB) 7/19/2005
AXA Advisors, LLC and AXA Distributors, LLC (PDF 264 KB) 8/3/2005
Dominion Investor Services, Inc. (PDF 34 KB) 8/4/2005
Transamerica Financial Advisors, Inc. (PDF 70 KB) 8/4/2005
Pace Investor Rights Project, Pace University School of Law (PDF 114 KB) 8/4/2005
National Society of Compliance Professionals (PDF 14 KB) 8/4/2005
Pacific Select Distributors, Inc. (PDF 107 KB) 8/4/2005
ING Advisors Network (PDF 125 KB) 8/4/2005
Contemporary Financial Solutions (PDF 42 KB) 8/5/2005
Securian Financial Services, Inc. (PDF 88 KB) 8/5/2005
Financial Services Institute (PDF 173 KB) 8/5/2005
Massachusetts Mutual Life Insurance Company and MML Investors Services, Inc. (PDF 342 KB) 8/5/2005
Richard M. Hewitt (PDF 109 KB) 8/5/2005
ING Americas (PDF 4,241 KB) 8/5/2005
The Massachusetts Securities Division (PDF 186 KB) 8/5/2005
Investment Company Institute (PDF 335 KB) 8/5/2005
American Family Securities, LLC (PDF 260 KB) 8/5/2005
Securities Industry Association (PDF 858 KB) 8/5/2005
1st Global Capital Corp. (PDF 265 KB) 8/5/2005
Coastal Securities (PDF 71 KB) 8/5/2005
T. Rowe Price Investment Services, Inc. (PDF 221 KB) 8/5/2005
M Holdings Securities, Inc. (PDF 42 KB) 8/8/2005
American Council of Life Investors (PDF 59 KB) 8/12/2005
Hines Real Estate Securities, Inc. (PDF 68 KB) 8/12/2005
ProEquities, Inc. (PDF 217 KB) 8/22/2005