Social Security: The Public Servant Retirement Protection Act (H.R. 2772/S. 1647) (CRS Report for Congress)
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| Release Date |
Revised July 9, 2007 |
| Report Number |
RL32477 |
| Report Type |
Report |
| Authors |
Laura Haltzel, Domestic Social Policy Division |
| Source Agency |
Congressional Research Service |
| Older Revisions |
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Premium July 19, 2004 (26 pages, $24.95)
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Summary:
In a February 2004 proposal, the SEC asked for public comment on the need foradditional changes to Rule 12b-1. Among other things, it proposed requiringdistribution-related costs to be directly deducted from individual shareholderaccounts rather than from aggregate fund assets, potentially benefitting investors bygiving them a more direct and thus a better understanding of sales charges. Butcritics say the proposal would result in investor's accounts eventually paying smallernominal amounts as they age, giving broker-dealers added incentive to churn theaccounts. There are additional concerns that the proposal might result in complicatedrecord-keeping burdens and added tax liabilities for investors. The 2004 proposal,also asked for public comment on whether Rule 12b-1 should be repealed. Butcritics responded that the plans are ingrained in the financial system and repeal couldmean reduced service for small investors by brokers and a shift to front-end loads,which do have the benefit of greater visibility relative to 12b-1 fees. In the spring of2007, SEC Chairman Cox announced that due to the perception that 12b-1 fees hadstrayed beyond their original intent, the agency would be reexamining 12b-1 duringthe year. To help in its deliberations, the agency sponsored a 12b-1 roundtableduring June 2007 in which a variety of differing perspectives were voiced on thefees' merits.
