SEC Approves NASD Rule Requiring Principal Approval of Retail Correspondence

Washington, DC, September 6, 2006 - The SEC has approved amendments to NASD Rule 2211 that require a registered principal to pre-approve correspondence sent to 25 or more existing retail customers if the correspondence makes any financial or investment recommendation or otherwise promotes a product or service of the member.

Background
In April 2005, NASD issued a request for comment on the proposal to amend Rule 2211, noting that the rule change would affect the NASD's definition of correspondence, which currently only includes written or electronic mail messages sent to fewer than 25 existing retail customers. The rule change becomes effective on December 1, 2006.

ICI Position
The Institute filed a comment letter in support of the proposed change, stating that principal approval helps to assure that customer correspondence is fair and balanced and otherwise complies with NASD and Securities and Exchange Commission requirements.

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