The Securities Industry and Financial Markets Association is calling on the U.S. Securities and Exchange Commission to allow mutual funds to keep paying trailer fees.
SIFMA submitted a comment letter to the SEC regarding Rule 12b-1, which permits mutual funds to use fund assets to finance the distribution of their shares. The comment letter responds to a roundtable event held by the SEC to re-evaluate the use of Rule12b-1, which SEC Chairman Christopher Cox feels may have “strayed from the original purposes of the underlying rule.”
“Rule 12b-1 plays an instrumental role in helping open the financial markets to millions of investors, and the consequences of curtailing Rule 12b-1 would be detrimental to their interests, as well as to the competitive financial marketplace,” says Ira Hammerman, senior managing director and general counsel for SIFMA.
SIFMA’s comment letter explains, “Rule 12b-1 has been a success; curtailing or withdrawing the rule would harm investors and competition in the marketplace.”