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FINRA relaxes restrictions on pre-inception performance data

Richard F. Kerr (Boston, Massachusetts, USA office of K&L Gates LLP)
Matthew J. Rogers (Boston, Massachusetts, USA office of K&L Gates LLP)

Journal of Investment Compliance

ISSN: 1528-5812

Article publication date: 21 August 2019

Issue publication date: 16 October 2019

Abstract

Purpose

To explain the significance of a recently issued interpretive letter in which FINRA staff agreed to permit the use of pre-inception index performance data by passively managed, registered open-end investment companies.

Design/methodology/approach

FINRA recently issued an interpretive letter extending previously issued guidance by permitting passively managed open-end registered investment companies including separately-managed series of a business trust to use pre-inception index performance data in Institutional Communications.

Findings

The 2019 Letter is an important shift in how FINRA staff views PIP data in Institutional Communications by acknowledging that passively managed open-end funds should be treated in a similar manner as passively managed exchange-traded funds. This shift will be a welcome development for FINRA member firms wishing to include PIP data in marketing materials for the passively managed open-end funds they distribute.

Originality/value

Practical guidance from experienced investment management and broker-dealer lawyers.

Keywords

Citation

Kerr, R.F. and Rogers, M.J. (2019), "FINRA relaxes restrictions on pre-inception performance data", Journal of Investment Compliance, Vol. 20 No. 3, pp. 6-9. https://doi.org/10.1108/JOIC-04-2019-0026

Publisher

:

Emerald Publishing Limited

Copyright © 2019, K&L Gates LLP.