A NASD Regulation proposal to prohibit broker/dealers from paying their registered representatives more for selling the broker/dealer's own mutual funds than for selling outside funds has run into opposition from trade groups representing the securities and mutual fund industries.

NASD Regulation at a minimum should defer action on the rule proposal, according to the Securities Industry Association and the Investment Company Institute. Of the two groups, the SIA is the most critical of the proposal and says the purported need for the proposed rule is unsupported by evidence of abusive sales practices of proprietary funds. Even a requirement that companies disclose details about extra pay for proprietary sales should be adopted only if NASD Regulation can point to problems based on NASD Regulation exams, said Marc E. Lackritz, president of the SIA, in a letter to NASD Regulation Oct. 28.

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