Anti-Reciprocal Rule

Anti-Reciprocal Rule

A FINRA rule stating that two investment companies and/or brokerages may not collude to direct business to each other. For example, the anti-reciprocal rule prohibits a mutual fund from conducting their trades through a certain brokerage in exchange for that brokerage directing investors to that mutual fund.
References in periodicals archive ?
AFD) violated NASD's Anti-Reciprocal Rule by directing brokerage commissions to securities firms that were the top sellers of American Funds mutual funds from 2001 through 2003.
The panel noted that the Anti-Reciprocal Rule was intended to abolish "reciprocal business practices in connection with the distribution of mutual fund shares, i.
The NAC upheld a FINRA Hearing Panel decision finding that AFD violated FINRA's Anti-Reciprocal Rule when it directed more than $98 million in brokerage commissions between 2001 and 2003 to the 46 retail securities firms that were the top sellers of its mutual funds.
In ruling on AFD's appeal of the Hearing Panel decision, the NAC concluded that AFD arranged for the direction of a specific amount or percentage of brokerage commissions to other securities firms conditioned upon those firms' sales of American Funds shares, an "outright" violation of FINRA's Anti-Reciprocal Rule.
NASD charged that the conduct by the four ING broker-dealers violated its Anti-Reciprocal Rule, which prohibits arrangements in which brokerage commissions are used to compensate firms for selling mutual fund shares.
The action announced today involves violations of NASD's Anti-Reciprocal Rule, which prohibits firms from favoring the sale of shares of particular mutual funds on the basis of brokerage commissions received by the firm.
NASD's Anti-Reciprocal Rule is an important regulatory tool that is designed to ensure that firms recommend mutual funds on their merits and not because of the receipt of brokerage commissions, which are assets of the mutual fund shareholders and should not be used for marketing purposes.
All of the cases involve violations of NASD's Anti-Reciprocal Rule, which prohibits firms from favoring the sale of shares of particular mutual funds on the basis of brokerage commissions received by the firm.
agreed to pay $75 million in resolution of charges that it failed to adequately disclose revenue sharing payments that it received from a select group of mutual fund families that it recommended to its customers, that it received directed brokerage payments in violation of the Anti-Reciprocal rule, and for other violations in settlements with NASD, the Securities and Exchange Commission, and the New York Stock Exchange.
AFD) with violating NASD's Anti-Reciprocal Rule by directing approximately $100 million in brokerage commissions over a three- year period to about 50 brokerage firms that were the top sellers of American Funds.