1 See Memorandum to Closed-End Fund Committee No. 18-96, SEC Rules Committee No. 72-96 and Unit Investment Trust Committee No. 27-96, dated July 10, 1996.
July 30, 1996
TO: CLOSED-END FUND COMMITTEE No. 23-96
SEC RULES COMMITTEE No. 84-96
UNIT INVESTMENT TRUST COMMITTEE No. 32-96
RE: INSTITUTE COMMENT LETTER ON NASD NON-CASH COMPENSATION
PROPOSAL
______________________________________________________________________________
As we previously informed you, the SEC recently solicited comments on the NASDs
proposed amendments to its rule governing non-cash and cash compensation in connection
with the sale of investment company securities.1 The Institute has filed the attached comment
letter with the SEC regarding the proposal.
The Institutes letter expresses support for the NASDs proposal and urges prompt SEC
approval. In addition, in response to certain of the SECs requests for comments on specific
issues, the letter: (1) opposes the imposition of recordkeeping requirements under the rule with
respect to permissible gifts and entertainment; and (2) recommends that the NASD consider
issues related to ordinary compensation practices (such as the practice of paying higher
commissions to registered representatives for proprietary products than for non-proprietary
products) as a separate matter, rather than in the context of the pending rule change proposal.
Finally, the letter expresses concern about the short period provided for public comment on this
important proposal and urges the SEC to establish longer comment periods in the future for
significant rule proposals by self-regulatory organizations.
Frances M. Stadler
Associate Counsel
Attachment