Jeffrey Puretz, Robert Robertson, Alan Rosenblat, Jutta Frankfurter and Cortney Scott
This paper aims to summarize amendments to Rule 22c‐2 under the Investment Company Act of 1940, the “redemption fee rule”, adopted by the Securities and Exchange Commission on…
Abstract
Purpose
This paper aims to summarize amendments to Rule 22c‐2 under the Investment Company Act of 1940, the “redemption fee rule”, adopted by the Securities and Exchange Commission on September 26, 2006.
Design/methodology/approach
Provides background to the redemption fee rule, defines financial intermediaries and intermediary chains, and discusses how funds are expected to implement the rule and associated frequent trading policies.
Findings
Under the redemption fee rule, the boards of most mutual funds are required to consider whether to implement a fee of up to 2 percent of the value of any shares redeemed by a customer from a fund within a short time after purchase. Amendments to the rule clarify operation of the rule and reduce mutual funds' costs in complying with it.
Originality/value
Outlines the requirements of the amendments to Rule 22c‐2 under the Investment Company Act of 1940.
Details
Keywords
Jeffrey S. Puretz, Anthony H. Zacharski, Alan Rosenblat and Alison C. Ryan
The purpose of this paper is to summarize and discuss FINRA Rule 2821, which covers broker‐dealer sales practices with respect to purchases and exchanges of deferred variable…
Abstract
Purpose
The purpose of this paper is to summarize and discuss FINRA Rule 2821, which covers broker‐dealer sales practices with respect to purchases and exchanges of deferred variable annuities.
Design/methodology/approach
The paper describes the transactions to which the rule applies; summarizes the four primary components, which relate to suitability obligations, review and approval, supervisory procedures, and training programs; discusses the background and history of the rule; and explains a conditional exemption from Rules 15c3‐3 and 15c3‐1 that permit a principal's review of transactions subject to Rule 2821 for up to seven days without triggering requirements for additional capital or customer reserve accounts.
Findings
The paper finds that deferred variable annuities now join a very small group of securities products that have their own custom suitability requirements.
Originality/value
The paper provides practical guidance by experienced lawyers specializing in financial services.