PALM DESERT, Calif. - The SEC might permit an exception to its two percent cap on redemption fees, allowing closed-end funds that are converting to an open-end structure to assess a redemption charge in excess of two percent, according to Paul Roye, director of the SEC's division of investment management.

The SEC may permit the exception because newly-converted open-end funds impose the fees for a limited period of time and face potential redemption pressure that funds usually do not encounter, Roye said. Otherwise, the SEC intends to hold firm on the two percent standard, he said.

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