The Investment Company Institute (ICI) has proposed that NASD Regulation (NASDR) revise its advertising rules to create separate standards for ads targeted to retail and institutional investors.
Advertising materials for investment advisers, retirement plan sponsors and sophisticated investors should be exempt from the detailed disclosure requirements that govern materials earmarked for retail investors, according to Craig Tyle, ICI general counsel. Instead, institutional advertising should be governed by general securities law anti-fraud standards, Tyle said.
In October, NASDR began an examination of its own rules to consider if some should be revised. Tyle made his remarks in a letter to NASDR dated Feb. 12 responding to NASDR's request for comment on the rule revision issue.
Nancy Condon, an NASDR spokesperson, said last week that the self-regulatory agency would not comment on proposals made in specific letters. There is no definitive timetable for the NASDR review to conclude, she said.
When it solicited comment, NASDR said it intended to protect investors while insuring that the agency's rules take into account costs and technological advances. Applying detailed disclosure requirements for institutional advertising increases costs while providing no offsetting benefits, Tyle said. Sales literature becomes, "cluttered with additional information that (institutional investors) do not need," Tyle said.
The ICI also suggested that NASDR permit the filing of all advertising material to take place electronically rather than by paper. NASDR examiners also should make comments electronically, Tyle wrote.
Tyle suggested that institutional advertising material no longer be filed with NASDR.