Publications

SEC: Staff Reconsiders 12b-1 Fee Rebates/SEC Proposes Internet Option for Disseminating Proxy Materials

Spring 2006
George M. Silfen | Philip A. Heimowitz
Mutual Funds Regulatory Updates - Spring 2006

SEC Staff Reconsiders 12b-1 Fee Rebates
In a recent no-action letter, E*TRADE Securities LLC (pub. avail. Dec. 1,2005), the staff of the Securities and Exchange Commission (the “Staff”) reconsidered positions taken in prior no-action letters and permitted implementation of E*TRADE’s 12b-1 fee rebate program. Under the E*TRADE program, shareholders of mutual funds participating in the E*TRADE “mutual fund supermarket” would receive a 50% rebate of the 12b-1 fees attributable to their mutual fund shares. In prior no-action letters, the Staff had suggested that any direct or indirect rebates of 12b-1 fees by a fund are inconsistent with the policies and provisions of the Investment Company Act of 1940, as amended (the “1940 Act”).

SEC Proposes Internet Option for Disseminating Proxy Materials
On December 8, 2005, the Securities and Exchange Commission (the “SEC”) proposed amendments to the proxy rules under the Securities Exchange Act of 1934, as amended, that would allow issuers and other persons the option of furnishing proxy materials to shareholders by posting them on an Internet website and providing shareholders with notice of the availability of the proxy materials.