Friday, April 22, 2005

NASD To Ban Sales Contests?

The NASD said on Thursday it is proposing to ban brokerages from conducting 'sales contests' that reward brokers for selling one particular security in preference to another.

The proposal would extend a prior ban on awards of non-cash prizes, such as concert tickets or stereo equipment, to encourage the sale of particular mutual funds, variable annuities and certain other securities.

Is anyone really doing this any more? Sure, for a period of time 15 years ago sales contests might have been a standard practice, but aren't the potential conflicts clear enough?

Oh wait, Reuters says that American Express is under investigation for sales contests to promote their proprietary "weaker performing" mutual funds. And Morgan Stanley ran sales contests with Britney Spears concert tickets as the top prize?

This rule change should sail through.
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