NASD’s focus on mutual fund abuses: The state of play and what’s to come

Abstract

Investor trust in the mutual fund industry has been undermined seriously in recent months by the wide range of abuses brought to light by federal and state regulators. While NASD does not have jurisdiction or authority over mutual funds or their advisors, it does regulate the sales practices of broker‐dealers that sell mutual funds to investors. It also has jurisdiction over the broker‐dealer affiliates of mutual fund complexes that are part of the underwriting and distribution chain for investment company securities. Accordingly, broker participation in illegal or unethical sales practices is a very direct concern of NASD. The organization has approached these problems on two different fronts. The first is in the area of rulemaking proposals for better and more extensive disclosure. The second is through tough and swift enforcement in the areas of compensation arrangements, revenue sharing, breakpoints, and after‐hours trading and market timing.

Citation

Goldsmith, B.R. and Gluck, I.D. (2004), "NASD’s focus on mutual fund abuses: The state of play and what’s to come", Journal of Investment Compliance, Vol. 4 No. 4, pp. 8-13. https://doi.org/10.1108/15285810310813220