SEC votes to amend and clarify operation of redemption fee rule

Purpose - This paper aims to summarize amendments to Rule 22c-2 under the Investment Company Act of 1940, the "redemption fee rule", adopted by the Securities and Exchange Commission on September 26, 2006.Design methodology approach - Provides background to the redemption fee rule, defines financial intermediaries and intermediary chains, and discusses how funds are expected to implement the rule and associated frequent trading policies.Findings - Under the redemption fee rule, the boards of most mutual funds are required to consider whether to implement a fee of up to 2 percent of the value of any shares redeemed by a customer from a fund within a short time after purchase. Amendments to the rule clarify operation of the rule and reduce mutual funds' costs in complying with it.Originality value - Outlines the requirements of the amendments to Rule 22c-2 under the Investment Company Act of 1940.