Subject: File No. S7-15-10
From: David Hensley
Affiliation: Principal, Asset Protection Network, Inc.
October 11, 2010
The rules being proposed such as:
- Renaming 12b-1 to enhance transparency for investors.
- Adopting additional disclosures of 12b-1 fees through confirmation statements, prospectus, and a point-of-sale of sale documents.
- Leaving Class A-share mutual funds largely unchanged by establishing a 25 bps safe harbor for 12b-1 fee payments.
- Treating additional 12b-1 fee amounts (e.g., 75 bps of the typical Class C-share fund trail) on future sales of mutual funds to a cap equal to:
- The maximum Class A-share load for funds with A-shares, or
- The caps established by NASD Rule 2830(d) (i.e., as much as 8.5%) if the fund does not have an A- share.
- Creating a new class of mutual funds shares that are issued at net asset value. The compensation paid on such mutual fund transactions would be the subject of negotiation.
My observation is all of these rules will adversely impact many of our clients by forcing them into higher costs over the long term in fee based accounts, my representatives I supervise will have their business model destroy, and it most likely will negatively impact INVEST Financial, my broker dealer.