IM-2830-1. 'Breakpoint' Sales
This rule is no longer applicable. NASD IM-2830-1 has been superseded by FINRA Rule 2342. Please consult the appropriate FINRA Rule.
The sale of investment company shares in dollar amounts just below the point at which the sales charge is reduced on quantity transactions so as to share in the higher sales charges applicable on sales below the breakpoint is contrary to just and equitable principles of trade.
Investment company underwriters and sponsors, as well as dealers, have a definite responsibility in such matters and failure to discourage and to discontinue such practices will not be countenanced.
For purposes of determining whether a sale in dollar amounts just below a breakpoint was made in order to share in a higher sales charge, the Association will consider the facts and circumstances, including, for example, whether a member has retained records that demonstrate that the trade was executed in accordance with a bona fide asset allocation program that the member offers to its customers:
- which is designed to meet their diversification needs and investment goals; and
- under which the member discloses to its customers that they may not qualify for breakpoint reductions that are otherwise available.
Amended by SR-NASD-99-74 eff. June 20, 2000.
Amended by SR-NASD-98-69 eff. Dec. 15, 1998.
Selected Notices: 98-98, 00-53.