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The Financial Industry Regulatory Authority, recently filed a proposed rule change with the U.S. Securities & Exchange Commission to to adopt NASD Rule 2830 (Investment Company Securities or mutual fund shares) as FINRA Rule 2341 (Investment Company Securities) with certain important changes.

NASD Rule 2830

NASD Rule 2830 regulates brokerage firms’ activities in connection with the sale and distribution of securities of mutual funds or investment company shares and limits the sales charges members may receive. It prohibits directed brokerage arrangements, limits the payment and receipt of cash and non-cash compensation, sets conditions on discounts to dealers, and addresses other issues such as purchases and sales of mutual funds as principal.

FINRA Rule 2341

Proposed FINRA Rule 2341 would revise the provisions of NASD Rule 2830 in four areas.

  1. Rule 2341 would require a member to make new disclosures to investors regarding its receipt of or its entering into an arrangement to receive, cash compensation.
  2. Rule 2341 would make a minor change to the recordkeepingrequirements for non-cash compensation.
  3. Rule 2341 would eliminate a condition regarding discounted sales of investment company securities to dealers.
  4. Rule 2341 would codify past FINRA staff interpretations regarding the purchases and sales of exchange-traded funds (ETFs).

Guiliano Law Group

Investors suffering losses or damages from such conduct may be able to recover their investment losses. Our practice is limited to the representation of investors in claims, for fraud in connection with the sale of securities, the sale or recommendation of excessively risky or unsuitable securities, breach of fiduciary duty, and the failure to supervise. We accept representation on a contingent fee basis, meaning there is no cost to you unless we make a recovery for you, and there is never any charge for a consultation or an evaluation of your claim. For more information contact us at (877) SEC-ATTY.