The Securities Industry and Financial Markets Association is calling on the U.S. Securities and Exchange Commission to allow mutual funds to keep paying trailer fees.

SIFMA submitted a comment letter to the SEC regarding Rule 12b-1, which permits mutual funds to use fund assets to finance the distribution of their shares. The comment letter responds to a roundtable event held by the SEC to re-evaluate the use of Rule12b-1, which SEC Chairman Christopher Cox feels may have “strayed from the original purposes of the underlying rule.”

“The roundtable was a huge success in terms of the diversity and expertise of the panelists, as well as with respect to the breadth of the issues covered,” says Ira Hammerman, senior managing director and general counsel for SIFMA. “The overall sentiment of the panel seemed to be that Rule12b-1 should be kept intact.”

Hammerman adds, “Rule 12b-1 plays an instrumental role in helping open the financial markets to millions of investors, and the consequences of curtailing Rule 12b-1 would be detrimental to their interests, as well as to the competitive financial marketplace.”

SIFMA’s comment letter explains, “Rule 12b-1 has been a success; curtailing or withdrawing the rule would harm investors and competition in the marketplace. Similarly, other fee arrangements have fostered innovation and supported higher levels of services. It may be appropriate to improve disclosures for the benefit of investors and fund boards, but it would be a major mistake for the SEC to withdraw or substantially curtail Rule 12b-1, or otherwise to restrict the fee arrangements that have fostered innovation, flexibility, and investor choice.”