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 www.sec.gov.

Please click http://www.sec.gov/news/press/2007/2007-106.htm to access the release announcing the roundtable.