B and C share

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Jan 19, 2006 5:48 pm

Not a frequent poster but I do read when things interest me.  I'm curious to know if anyone is changing their stance on B and C share sales based on the recent lawsuits.  Merril et al getting fined 40 million (And probably 80 million more in restitution to clients) makes me wonder if I shouldn't switch to more A share biz.


Just curious.

Jan 19, 2006 11:22 pm

You should do what is in the best interest of the client.  We are required to run NASD expense analyzer for most B and C share sales.  My business in load funds is 60% A, 10% B, 30% C 

Jan 20, 2006 12:25 am

Just use a wrap platform or a flat fee platform.  You can get whatever fund is best for the client without a sales load.

Jan 20, 2006 10:33 am

All firms have probably already made whatever compliance/policy changes that are necessary to satisfy the NASD, including things like cost disclosures and limits on maximum B and/or C share holdings.  The regulators raised these concerns quite a while ago.  The fines against Merrill, LPL, Citigroup, American Express, etc. were for violations for a period ending a couple years ago. 


So, I'm sure your b/d (assuming it's a quality one) already has the necessary policies/procedures in place to protect you & it re B or C share sales.

Jan 20, 2006 10:38 am

Franklin Funds doesn't even offer B shares any more.  I suspect that other fund companies may take this route as well.  As Duke says most firms have already reduced and are strictly monitor the amount of B shares you can sell.