SEC Approves Interpretive Notice on Customer Protection Obligations Relating to the Marketing of 529 College Savings Plans
On June 8, 2006, the Securities and Exchange Commission approved an interpretive notice of the Municipal Securities Rulemaking Board (“MSRB”) relating to customer protection obligations of brokers, dealers and municipal securities dealers (“dealers”) marketing 529 college savings plans.[1] The interpretive notice strengthens and clarifies dealers’ obligations to provide important disclosures to customers investing in out-of-state 529 college savings plans and to undertake active suitability analyses for recommended transactions in 529 college savings plans based on appropriately weighted factors. For a detailed discussion of the interpretive notice, as well as to view the text of the interpretive notice, see MSRB Notice 2006-07 (March 31, 2006).[2] The interpretive notice becomes effective on August 7, 2006, although dealers are urged to comply with the interpretive notice as soon as practicable.
Questions regarding the proposed interpretation may be directed to Ernesto A. Lanza, Senior Associate General Counsel, or Jill C. Finder, Assistant General Counsel.
June 15, 2006
[2] In addition, MSRB Notice 2006-07 includes a discussion of the need for a more comprehensive and user-friendly 529 college savings plan disclosure system and of current initiatives to address this need. The MSRB urges dealers and other participants in the 529 college savings plan market to provide the investing public with easy access to market-wide information and to encourage the use of existing and future information utilities. The MSRB will monitor disclosure practices in the 529 college savings plan market for any significant failures in the further development of the disclosure dissemination system.
