Institute Comments on NASDR Bond Fund Volatility ProgramWashington, DC, September 21, 2001 - The Institute recently filed a comment letter with the Securities and Exchange Commission in response to the agency's request for comment on the extension of the pilot program permitting NASD members to use bond fund volatility ratings in supplemental sales literature until August 31, 2003. The Institute's comment letter opposes the extension of the pilot program, and recommends that NASDR prohibit the use of these ratings altogether. In the event that the pilot program is extended, the letter stresses the importance of rejecting any arguments to weaken the restrictions on the use of volatility ratings to avoid putting investors at risk. The letter further recommends strengthening the investor safeguards to prohibit the use of a single symbol, number, or letter to describe a volatility rating. Finally, the letter encourages NASDR to undertake a comprehensive review of the pilot program, publish the results, and solicit further comment before determining whether to allow volatility ratings in supplemental sales literature on a permanent basis. The Institute submitted previous comments expressing opposition to the program in March 2000.
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