FPA Lauds Disclosure of Fund Conflicts, Urges NASD to Expand Disclosure: The Financial Planning Association has lauded a rule that was proposed by the National Association of Securities Dealers to expand disclosure of sales incentives by stockbrokers in the sale of mutual fund shares, but said that it doesn’t go far enough.
The NASD proposed disclosure to brokerage customers that a broker/dealer is paid by fund companies for “shelf space” to list funds for sale, and that stockbrokers may receive higher commissions in the sale of some of those mutual funds. However, the proposal would only require brokers to disclose that they may receive “different rates of compensation,” and not the dollar amount, so consumers would have to go to at least two different disclosure statements to see fee expenses and brokerage costs, which would be confusing, according to the FPA.
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