Financial Services Industry Faces 22c-2 October 16, 2007 Deadline

23 February 2007

On March 11, 2005, the Securities and Exchange Commission (SEC) adopted Rule 22c-2 under the Investment Company Act of 1940 to help curb abuses associated with short-term trading of mutual fund shares. Rule 22c-2 goes into effect on October 16, 2007 and provides that if a fund shareholder redeems their shares within seven days, its board must consider whether to quickly impose a redemption fee of up to two percent of the dollar value of the shares redeemed. Rule 22c-2 impacts both the mutual funds and the financial intermediaries (broker-dealers.) Mutual fund Rule 22c-2’s compliance deadline has previously been extended by the SEC, and the market does not anticipate it to be extended again.

“With over 500 mutual funds and 6,500 financial intermediaries, this ruling has an impact across every spectrum of the financial services industry” says Sanjay Bery, Asset Management Solution Partner at BusinessEdge Solutions Inc. “Surprisingly, many companies impacted have just started the planning for 22c-2 and the deadline is just 7 months away. To implement a 22c-2 quickly and cost effectively requires planning, understanding of the vendor landscape and coordination with all stakeholders.”

BusinessEdge combines it’s extensive experience in compliance and asset management and has service offerings to assist mutual funds and financial intermediaries in timely implementation of 22c-2. The service offerings include vendor selection, solution implementation and workflow redesign. BusinessEdge has experience assisting both mutual fund and financial intermediaries in selection and implementation of 22c-2 solutions.

“22c-2 deadlines are approaching and action must be taken. Plugging in the wrong solution is not the answer – each mutual fund and financial intermediary company must take an overall view of it’s current situation and determine the best solution to solving the 22c-2 issue,” says Dick Whitney, Compliance Solution Partner at BusinessEdge Financial Services.

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