12b-1 Fees to be Topic of SEC Roundtable

The Securities and Exchange Commission (SEC) will host a roundtable discussion about Rule 12b-1 under the Investment Company Act of 1940, which allows mutual funds to use fund assets to finance the distribution of their shares.
According to an SEC news release, the discussion, to be held on June 19, will cover:
  • the historical circumstances that led to the promulgation of Rule 12b-1 and the original intended purpose of the rule;
  • the evolution of the uses of Rule 12b-1 and the rule’s current role in fund distribution practices;
  • the costs and benefits of the current use of Rule 12b-1; and
  • the options for reform or rescission of Rule 12b-1.
A final agenda and list of participants and moderators will be published closer to the date of the roundtable. The roundtable will begin at 9:00 a.m., and will be held in the auditorium at the Commission’s headquarters. The roundtable will be open to the public with seating on a first-come, first-served basis. Doors will open at 8:30 a.m., and visitors will be subject to security checks. The roundtable discussion also will be available via Web cast on the Commission’s Web site at www.sec.gov.
“When the Commission adopted Rule 12b-1 more than a quarter century ago, the idea was that 12b-1 fees would be a temporary solution to address specific distribution problems, as they arose. But today’s uses of 12b-1 fees have strayed from the original purposes underlying the rule, and it is time for a thorough re-evaluation,” said SEC Chairman Christopher Cox. “This roundtable will help us review current uses of 12b-1 fees, how those fees impact retail investors, and the interests and concerns of independent directors, who must approve 12b-1 plans. The roundtable also will help us identify and evaluate the possibilities for reforming Rule 12b-1.”
According to the SEC, members of the public interested in submitting their input can use:
Send paper submissions in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, N.E., Washington, DC 20549-1090.
All submissions should refer to File Number 4-538. This file number should be included on the subject line if e-mail is used. To help process and review your submissions more efficiently, please use only one method.

AXA Equitable Enhances Variable Annuity Offering

AXA Equitable Life Insurance Co. has enhanced its Accumulator series of variable annuities, including an expanded choice of "living benefits" and the unbundling of optional income and death benefits.
In an announcement, AXA Equitable said it has added a 6.5% roll-up benefit for contracts with certain Guaranteed Minimum Income Benefit (GMIB) and Guaranteed Minimum Death Benefit (GMDB) riders in addition to its existing 6% roll-up benefit. The GMIB provides contract holders with a “floor” of guaranteed income for life derived from a GMIB benefit base that equals the contributions compounded annually at either 6% or 6.5% or, if greater, the account value on the contract’s anniversary.
With the annual re-set feature of the roll-up portion of the GMIB benefit base, on any contract anniversary that the account value is higher than the roll-up benefit base, the owner can re-set the roll-up benefit base to equal the account value. The annual re-set can be chosen up until age 75, but each re-set triggers a new 10-year waiting period until contract holders can exercise their GMIB (unless the original exercise date would be later), the announcement said.
Also included is a No-Lapse Guarantee, where AXA Equitable will exercise the GMIB for the contract holder as long as no “excess” withdrawals have been taken, even if the account balance falls to zero.
In addition, AXA Equitable will now offer the GMIB with the annual re-set feature as a stand-alone benefit separate from the GMDB, subject to certain investment limitations. The firm has added the EQ/Franklin Templeton Founding Strategy portfolio as an investment option in addition to the AXA Asset Allocation Portfolios and the Guaranteed Interest Option.
With the GMDB, beneficiaries will receive the greater of:
  • The final value of the underlying account at the date AXA Equitable receives all required information,
  • The annual ratchet benefit base, which is the highest account value on any contract anniversary up to age 85 (adjusted for withdrawals), or
  • The roll-up benefit base, which is the total of contributions the contract holder has made to the Accumulator account, compounded at 6% or 6.5% annually, up to age 85 (adjusted for withdrawals).
More information is at www.equitable.com.

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