Summary: In February 2004, the SEC proposed new Rules 15c2-2 and 15c2-3 under the 1934 Act and
amendments to Rule 10b-10 under the 1934 Act to require broker-dealers to provide their customers with
information regarding distribution-related costs and conflicts of interest that arise from the distribution of
mutual funds, 529 plans and variable annuities.
Proposed Rule 15c2-2 would govern confirmation disclosure requirements for these products and would
require information about:
- front-end and deferred sales fees and other distribution-related costs
- the broker-dealer's compensation for selling the securities
- revenue sharing arrangements and portfolio brokerage arrangements
- whether the broker-dealer's salespersons receive extra compensation for selling fund shares
Proposed Rule 15c2-3 would require broker-dealers to provide point of sale disclosure to customers and
would require the following disclosures:
- transaction-specific distribution related costs; and
- remuneration arrangements that lead to conflicts
Status: The comment period on the proposed rules and amendments initially expired on April 12, 2004.
On February 28, 2005, the SEC reopened this proposal for comment and in response to feedback
received, requested supplemental comments on revised versions of the proposed point of sale and
confirmation documents. The reopened comment period expired on April 4, 2005. The proposal awaits
further action by the SEC.