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Funds are not banned outright from choosing a broker/dealer that sells its funds to execute portfolio trades. Instead, the SEC requires that the fund ensure that selling agreements do not influence that decision.
"The amendment permits a fund to use a selling broker to execute transactions in portfolio securities, but only if the fund or its advisor has implemented policies and procedures designed to ensure that the selection of selling brokers for portfolio securities transactions is not influenced by considerations related to the sale of fund shares," the agency stated in a release.
The SEC first proposed an amendment in February of 2003, which was later adopted with little change in August.