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GAO-07-128R 1 (2006-10-16)

handle is hein.gao/gaobadwqa0001 and id is 1 raw text is: I GA0 LV.W3L11 1= Accountability * Integrity * Reliability United States Government Accountability Office Washington, DC 20548 B-298930 October 16, 2006 The Honorable Richard C. Shelby Chairman The Honorable Paul S. Sarbanes Ranking Minority Member Committee on Banking, Housing, and Urban Affairs United States Senate The Honorable Michael G. Oxley Chairman The Honorable Barney Frank Ranking Minority Member Committee on Financial Services House of Representatives Subject: Securities and Exchange Commission: Mutual Fund Redemption Fees Pursuant to section 801(a)(2)(A) of title 5, United States Code, this is our report on a major rule promulgated by the Securities and Exchange Commission (SEC), entitled Mutual Fund Redemption Fees (RIN: 3235-AJ51). We received the rule on September 28, 2006. It was published in the Federal Register as a final rule on October 3, 2006. 71 Fed. Reg. 58257. The final rule amends Rule 22c-2, which permits registered open-end investment companies (funds) to impose a redemption fee of up to 2 percent on the redemption of fund shares. The rule is intended to allow funds to recoup some of the direct and indirect costs of frequent trading and to reduce the dilution of fund shares. The rule also requires that the fund, regardless of whether it imposes a redemption fee, enter into a written agreement with each of its intermediaries (such as broker-dealers or retirement plan administrators) under which the intermediaries must provide the fund, upon request, information about the identity of shareholders and information about their transactions in fund shares. These amendments to the prior rule are designed to address certain technical issues that arose after the rule was adopted and reduce the cost of compliance to both funds and financial intermediaries. Enclosed is our assessment of the SEC's compliance with the procedural steps required by section 801(a)(1)(B)(i) through (iv) of title 5 with respect to the rule. Our review indicates that SEC complied with the applicable requirements. GAO-07-128R

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