Rule 12b-1: a look at the past, present and future

摘要

Purpose – The purpose of this paper is to assess the history, current use, and possible future of Rule 12b-1 of the Investment Company Act of 1940. Design/methodology/approach – This paper briefly reviews the history behind the original adoption of Rule 12b-1, then discusses the ways in which 12b-1 fees are used today, some of the issues surrounding the Rule, and finally, briefly explores where we might be heading in the future. Findings – The paper finds that, first adopted in 1980 in an effort to prop up a then ailing industry, Rule 12b-1 and Rule 12b-1 fees have been a staple for many mutual funds for almost 30 years. Over this time, the ways in which 12b-1 fees are used has evolved significantly such that some people now wonder whether the Rule continues to serve the purpose for which it was designed. Originality/value – The paper provides a comprehensive evaluation of how mutual funds' use of Rule 12b-1 has changed, what the underlying issues are, and the prospects for reexamination of the Rule.