Sales practices in the fund industry are already taking hits, but leave it to NASD to take another stab.

The NASD is proposing a ban on all cash and non-cash sales incentives for any particular type of mutual fund, security, variable annuity or other products. NASD already bans non-cash sales incentives.

The self-regulating body made the announcement on its website on late Thursday, and plans on coming out with a rule proposal for comment on its website shortly. The agency then plans on sending the rule proposal along to the SEC.

"A broker's first responsibility is to recommend securities that are right for the investor. Sales contests, whether they pay off in cash or cruises, that favor particular securities can interfere with that responsibility," stated Robert Glauber, chairman and CEO of NASD.

Morgan Stanley landed in hot water with New Hampshire regulators earlier this year for promoting in-house funds through sales contests. 

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