Notice to Members 03-68

NASD Reminds Members That Fee-Based Compensation Programs Must Be Appropriate

Fee-based programs typically charge a customer a fixed fee or percentage of assets under management in lieu of transaction-based commissions. While NASD recognizes the benefits these programs offer for many customers, they are not appropriate in all circumstances. NASD therefore reminds members that they must have reasonable grounds for believing that a fee-based program is appropriate for a particular customer, taking into account the services provided, cost, and customer preferences.

Questions concerning this Notice should be directed to Philip Shaikun, Associate General Counsel, Office of General Counsel, Regulatory Policy and Oversight, at (202) 728-8451.