NASD and MSRB Issue Joint Statement on Consistent Sales Practice Rules for 529 Plans and Mutual Funds

On February 22, 2006, NASD and the Municipal Securities Rulemaking Board (MSRB) issued a joint statement announcing their intent to cooperate to harmonize the MSRB rules and the NASD rules applicable to sales practices for 529 Plans and mutual funds. Because 529 Plans are municipal securities, they are primarily regulated by the MSRB. However, 529 Plans typically use registered mutual funds as their primary investment vehicle, and most municipal securities dealers that sell 529 Plans are also NASD members.

The joint statement describes three general areas of agreement between the MSRB and NASD:

• The MSRB will generally adopt rules and interpretations concerning 529 Plans that are substantially equivalent to the NASD rules and interpretations concerning mutual fund sales practices.
• The MSRB and NASD will each provide the other with an opportunity to comment on relevant proposed rules concerning 529 Plans and mutual funds before they are filed with the SEC or published for comment.
• The MSRB and the NASD will cooperate and coordinate any response to a request for information or rulemaking by the SEC concerning 529 Plans.

View NASD/MSRB Joint Statement

Securities Industry FYI is a service of the Broker-Dealer Practice of Morgan Lewis. If you have any questions concerning these important legal developments, please contact any member of Morgan Lewis’s Broker-Dealer Practice, including:

Washington, D.C.
Mark Fitterman
202.739.5019
mfitterman@morganlewis.com

Beth Kiesewetter
202.739.5127
bkiesewetter@morganlewis.com