The Securities Industry and Financial Markets Association is calling on the Securities Exchange Commission to preserve the U.S. version of trailer fees.

SIFMA has prepared a white paper on the history and purpose of Rule 12b-1, which permits mutual funds to use fund assets to finance the distribution of their shares. The white paper has been provided as background material for panelists participating in a roundtable event on the rule being held today in Washington D.C. by the SEC.

“While we appreciate the SEC’s efforts to undertake a review of Rule 12b-1, we ultimately believe that the rule is important to both firms and investors,” points out Ira Hammerman, senior managing director and general counsel for SIFMA. “For broker-dealers and other intermediaries, 12b-1 plans support important marketing, advertising, and administrative and shareholder servicing functions.”

“Since its inception,” Hammerman explains, “the rule has been instrumental in helping open the financial markets to millions of investors, who today hold many varieties of well-diversified and reasonably priced mutual funds.”

Hammerman adds, “The fees provided for under Rule 12b-1 are both warranted and critical, and the safeguards provided pursuant to the rule ensure that these fees are reasonable, thereby protecting investors from any potential abuse. We hope that this panel, and subsequently the SEC, will conclude that this important rule needs to be preserved.”