December 22, 1992
TO: BOARD OF GOVERNORS NO. 93-92
SEC RULES COMMITTEE NO. 94-92
STATE LIAISON COMMITTEE NO. 45-92
UNIT INVESTMENT TRUST COMMITTEE NO. 71-92
SUBCOMMITTEE ON ADVERTISING NO. 16-92
RE: NASAA COMMITTEE TO STUDY INVESTMENT COMPANY SALES PRACTICES
__________________________________________________________
The North American Securities Administrators Association
("NASAA"), recently formed a new committee, the Investment
Company Sales Practices Committee. According to NASAA, the
Committee will "evaluate whether suitability requirements are
necessary for certain types of mutual funds, such as junk bond
mutual funds."
Other projects the Committee will be reviewing include the
following:
(1) study and report on the effectiveness of current state and
federal regulation regarding sales practices of investment
companies, including preventing unsuitable sales, curbing
manipulative and deceptive sales techniques and preventing
sales by untrained personnel. Assess whether special
problems exist when sales are made through affiliated
broker-dealers;
(2) review survey completed by the 1991 Investment Companies
Committee concerning complaints regarding investment
companies and develop recommended solutions;
(3) study and report on the effectiveness of current state and
federal regulation of advertising practices of investment
companies;
(4) evaluate current disclosure requirements for sales
incentives for mutual funds. Determine whether current
disclosure guidelines are sufficient and, if not, determine
whether further regulatory action is justified; and
(5) evaluate whether the Series 6 examination is sufficient to
qualify an agent to sell mutual funds.
The following individuals have been appointed to serve on
the Committee: Miriam S. Dant, Chair (Indiana), William Mohr,
Vice chair (New York), Linda M. Cohen (Rhode Island), Ann D.
Diers (Nebraska) and Dan Raschke (Texas).
The Institute has been in contact with the Chair and Vice-
Chair of the Committee to offer information and assistance with
the above-referenced projects.
We will keep you advised of developments.
Patricia Louie
Associate Counsel