[15666]
February 19, 2003
TO: BOARD OF GOVERNORS No. 8-03
BROKER/DEALER ADVISORY COMMITTEE No. 7-03
PRIMARY CONTACTS - MEMBER COMPLEX No. 15-03
SEC RULES MEMBERS No. 22-03
RE: JOINT NASD/INDUSTRY BREAKPOINT TASK FORCE
NASD has announced the formation of a task force to recommend ways in which the
mutual fund and brokerage industries can assure that investors are not overcharged when they
purchase mutual funds with front-end loads. An NASD news release announcing the
formation of the Breakpoint Task Force is attached.
According to NASD’s release, the SEC asked NASD, with the support of the ICI and the
Securities Industry Association, to spearhead the formation of the task force after routine NASD
examinations found that investors do not always receive the correct sales charge discounts. In a
recent Notice to Members, NASD directed its members that sell mutual funds with front-end
loads to immediately review the adequacy of their policies and procedures to ensure that
investors are charged the correct sales loads on mutual fund transactions. The release states
that the Breakpoint Task Force is intended to identify and guide the implementation of a more
uniform and cost-effective solution to supplement or replace corrections crafted by individual
firms.
The Task Force will be chaired by Mary Schapiro, Vice Chairman, NASD, and President,
Regulatory Policy and Oversight, NASD. She will be joined by ICI General Counsel Craig Tyle,
as well as Stuart Kaswell, Vice President and General Counsel, SIA, and Elisse Walter,
Executive Vice President, Regulatory Policy and Oversight, NASD. Other mutual fund industry
Task Force members include: Karnig H. Durgarian, Senior Managing Director, Putnam
Investments; Terry K. Glenn, Chairman of the Americas and President of ML Funds, Merrill
Lynch Investment Managers; Tony Green, President, AIM Fund Services, Inc.; Paul G. Haaga,
Jr., Executive Vice President, Capital Research and Management Company; and George
Hrabovsky, President, Alliance Global Investor Services, Inc.
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Additional information on mutual fund sales charge breakpoint issues is available on
the ICI’s public website at http://www.ici.org/issues/understand_breakpoints.html.
Frances M. Stadler
Deputy Senior Counsel
Attachment (in .pdf format)