RegulationsPregunta 50 de 110
A representative repeatedly redeems a customer's shares in one fund family and reinvests the proceeds in a similar fund at another family, generating a new sales charge each time. This practice is called:
a.Front-running
b.Selling dividends
c.Switching, and it is prohibited
d.Rights of accumulation
Explicación
Moving a customer between funds with substantially similar objectives solely to generate additional sales charges is switching, and absent a documented benefit to the customer it is a prohibited practice. Front-running involves trading ahead of a known block order. Selling dividends concerns timing a purchase around a distribution, and rights of accumulation is a legitimate breakpoint feature.
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- Before a newly formed open-end fund may offer shares to the public, the Investment Company Act of 1940 requires it to have:
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