3.5.5.5. Purchasing and Redeeming Mutual Fund Shares
Several rules apply regarding how members can purchase and redeem mutual fund shares. When member firms sell shares of a mutual fund, they must secure a written agreement between the sponsor and the member firm. This agreement must stipulate the compensation to the member, which typically takes the form of a discount of the public offering price, often called a concession. The firm then sells the shares to the public at the public offering price. Firms may not sell the shares to investors or non-member broker-dealers at less than the public offering price (except in the case of a breakpoint discount disclosed in the prospectus).
Members’ compensation must be stated in the prospectus, and if the fund’s sponsor decides to give some member a different compensation than others, the name of t