FINRA Proposes New Rule to Consolidate Certain NASD Regulations

FINRA proposed transferring NASD Rule 2830 to the FINRA Rulebook as FINRA Rule 2341, making only "non-substantive, technical changes to the text." The rule regulates members' activities in connection with the sale and distribution of securities of companies registered under the Investment Company Act, by:

• limiting the sales charges members may receive;

• prohibiting directed brokerage arrangements;

• limiting the payment and receipt of cash and non-cash compensation;

• setting conditions on discounts to dealers; and

• addressing other issues such as members' purchases and sales of investment company securities as principal.

FINRA filed the proposed rule change as immediately effective with an implementation date of 30 days after the filing. The transfer is part of FINRA's ongoing rulebook consolidation process, designed to provide additional clarity and regulatory efficiency to FINRA members by consolidating the applicable NASD, incorporated NYSE, and FINRA rules into one rule set.