* See Memorandum to Advertising Compliance Subcommittee No. 27-98 and SEC Rules Committee No. 59-98, dated June
18, 1998.
[10097]
July 6, 1998
TO: ADVERTISING COMPLIANCE SUBCOMMITTEE No. 32-98
SEC RULES COMMITTEE No. 69-98
RE: INSTITUTE COMMENT LETTER ON PROPOSED RESEARCH REPORTS
FILING EXEMPTION
______________________________________________________________________________
The Institute recently filed with the SEC the attached comment letter on a proposal to amend
NASD Conduct Rule 2210 to exclude independently prepared investment company research reports that
are used as sales material from the filing requirements of Rule 2210.*
The letter generally supports the proposal, but it recommends a number of changes. First, the
letter recommends that the rule include a specific definition of the term “research report.” Second, it
suggests that the rule clarify that a fund or member may pay fees to research firms for distributing
research reports or for performing other research services. Third, it recommends that the rule require
members to include current performance information if the report contains fund returns that are not
current as of the most recent calendar quater end. Fourth, it recommends that the rule clarify that
research reports may include performance ranking information. Finally, it recommends that the rule
permit alterations to reports to make them consistent with applicable regulatory standards.
Joseph P. Savage
Assistant Counsel
Attachment