Rule 12b‐1: a look at the past, present and future
Abstract
Purpose
The purpose of this paper is to assess the history, current use, and possible future of Rule 12b‐1 of the Investment Company Act of 1940.
Design/methodology/approach
This paper briefly reviews the history behind the original adoption of Rule 12b‐1, then discusses the ways in which 12b‐1 fees are used today, some of the issues surrounding the Rule, and finally, briefly explores where we might be heading in the future.
Findings
The paper finds that, first adopted in 1980 in an effort to prop up a then ailing industry, Rule 12b‐1 and Rule 12b‐1 fees have been a staple for many mutual funds for almost 30 years. Over this time, the ways in which 12b‐1 fees are used has evolved significantly such that some people now wonder whether the Rule continues to serve the purpose for which it was designed.
Originality/value
The paper provides a comprehensive evaluation of how mutual funds' use of Rule 12b‐1 has changed, what the underlying issues are, and the prospects for reexamination of the Rule.
Keywords
Citation
Rosella, M.R. and Pugliese, D. (2007), "Rule 12b‐1: a look at the past, present and future", Journal of Investment Compliance, Vol. 8 No. 2, pp. 9-16. https://doi.org/10.1108/15285810710759434
Publisher
:Emerald Group Publishing Limited
Copyright © 2007, Emerald Group Publishing Limited