SEC Proposes New Distribution Fee Framework

The Securities and Exchange Commission announced July 21, 2010, that its staff was proposing a new rule and rule amendments that would place limits on the cumulative sales charges investors pay and encourage competition by allowing funds to permit broker-dealers to establish their own sales charges. The proposal would also eliminate Rule 12b-1 and the requirement that a fund's board of directors explicitly approve and annually reapprove a fund's distribution arrangements.

"Marketing and Service Fees" and "Ongoing Sales Charges"

The proposal would rescind Rule 12b-1 in its entirety and instead permit funds to deduct "Asset-Based Distribution Fees" pursuant to new proposed Rule 12b-2 and pursuant to amendments to Rule 6c-10.