The SEC will host a roundtable discussion on June 19, 2007 on issues surrounding Rule 12b-1 under the Investment Company Act of 1940. Rule 12b-1 permits mutual funds to use fund assets to finance the distribution of their shares. The roundtable will consist of panels addressing:

  • the historical circumstances that led to the promulgation of Rule 12b-1, and the original intended purpose of the rule; 
  • the evolution of the uses of Rule 12b-1 and the rule's current role in fund distribution practices; 
  • the costs and benefits of the current use of Rule 12b-1; and 
  • the options for reform or rescission of Rule 12b-1.

The SEC stated in the release announcing the roundtable that 12b-1 fees were originally designed as a temporary solution to address specific distribution problems. Because today's uses of 12b-1 fees have strayed from the original purposes underlying the rule, the SEC believes that it is necessary for a thorough re-evaluation of the rule. Participants in the roundtable will review current uses of 12b-1 fees, how those fees impact retail investors, and the interests and concerns of independent directors, who must approve 12b-1 plans. One of the goals of the roundtable is identify and evaluate the possibilities for reforming Rule 12b-1.

A final agenda and list of participants and moderators will be published closer to the date of the roundtable. The roundtable will begin at 9:00 a.m., EST at the Auditorium in the SEC's headquarters at 100 F Street, N.E., Washington, D.C. The roundtable will be open to the public with seating on a first-come, first-served basis. Doors will open at 8:30 a.m., and visitors will be subject to security checks. The roundtable discussion also will be available via webcast on the Commission's Web site at

Please click to access the release announcing the roundtable.