In response to a request for comment, the Investment Company Institute sent a letter late last month to the Municipal Securities Rulemaking Board (MSRB) encouraging the board to regulate municipal fund securities, particularly 529 college savings plans, like mutual funds. The MSRB, a self-regulatory organization that is supervised by the Securities and Exchange Commission, develops rules regulating securities firms and banks involved in underwriting, trading, and selling municipal securities and bonds issued by states, cities, and counties or their agencies to help finance public projects.
The MSRB filed a notice of a proposed rule revision and requested comment on certain rules pertaining to municipal securities, including 529 plans. The ICI supports the MSRBs proposed rule to regulate 529 plans in the same way mutual funds are regulated under the federal securities laws and NASD rule because "contributions by individuals to Section 529 plans are typically invested in one or more registered investment companies. Thus, from the perspective of the investor, interests in Section 529 plans are very similar to investments in mutual funds," according to the ICIs letter to the MSRB. Also, most of the 529 plans have experience in dealing investment company securities, not traditional municipal securities, according to the letter.