Securities and Exchange Commission 2005 – Federal Register Recent Federal Regulation Documents

The Securities and Exchange Commission (``Commission'' or ``SEC'') is adopting a new rule that allows registered open-end investment companies (``funds'') to impose a redemption fee, not to exceed two percent of the amount redeemed, to be retained by the fund. The redemption fee is intended to allow funds to recoup some of the direct and indirect costs incurred as a result of short-term trading strategies, such as market timing. The new rule also requires most funds to enter into written agreements with intermediaries (such as broker-dealers and retirement plan administrators) that hold shares on behalf of other investors, under which the intermediaries must agree to provide funds with certain shareholder identity and transaction information at the request of the fund and carry out certain instructions from the fund. The Commission is also requesting additional comment to obtain further views on whether it should establish uniform standards for redemption fees charged under the rule.