The National Association of Securities Dealers and the Municipal Securities Rulemaking Board have issued a joint statement promising cooperation to harmonize mutual fund and 529 plan sales rules, as there is heightened concern over lack of regulatory consistency.
Mutual funds and 529 plans have the same types of characteristics and have some of the same sales practice issues, and the two regulatory bodies believe that the "harmonization of MSRB rules and NASD rules would further protect the investing public."
"Investors have a right to expect that products that look the same are regulated the same way - and mutual funds and 529 plans look as much alike as oranges and tangerines," said NASD Chairman Robert R. Glauber. "The cooperation between the MSRB and the NASD to make their rules consistent is a model for how regulators with interrelated responsibilities can serve investors."
"This joint statement reinforces our longstanding commitment to putting in place effective customer protection rules for the benefit of individual investors in the 529 plan market,' said Amelia A.J. Bond, MSRB chairman. Christopher A. Taylor, MSRB executive director, added, "We believe that the joint statement will facilitate our two organizations' efforts to ensure that future challenges facing investors in both marketplaces can be addressed in a unified manner."
The MSRB will adopt rules for 529 plans that are equivalent to rules the NASD sets forth for mutual funds.
"Harmonization of MSRB rules and interpretations applicable to sales practices for 529 plans and NASD rules and interpretations applicable to sales practices for mutual funds has the dual benefit of protecting investors in both markets under similar standards, and subjecting municipal securities dealers to similar regulations irrespective if whether the product being sold is a 529 plan interest or shares in a mutual fund," the statement says.