Investment Company Securities

SIFMA’s Private Client Legal Committee provides comments to the Financial Industry Regulatory Authority (FINRA) on investment company securities, FINRA Regulatory Notice 09-34. As a general matter, we laud FINRA’s efforts as part of its process to develop a new consolidated rulebook to address its rules on the distribution and sale of investment company securities and its efforts to ensure that related disclosures may lead to better decision-making by clients and reduce the potential for conflicts of interest and abuse. We believe, however, that certain provisions of the proposed amendments to Conduct Rule 2830 (renumbered as Conduct Rule 2341) require reconsideration and that, more fundamentally, given the Security and Exchange Commission’s (SEC) primacy in regulating mutual fund prospectus disclosure and the SEC’s contemplation of further rule proposals on “point of sale” disclosure, FINRA should coordinate its rulemaking efforts with the SEC to avoid inconsistencies in disclosures, unnecessary and potentially duplicative costs on its members, and confusion among the investing public.