Practice

The Securities and Exchange Commission's comment period on actively managed exchange-traded funds ended last week, but the new type of ETFs that will likely soon be approved by the Commission are those based on fixed-income indices.

Looking ahead to 2002 there are several issues both with mutual fund regulation and proposed legislation that will likely reach some conclusion this year. Late last year, the Securities and Exchange Commission sent out a letter seeking comment on the development of actively managed exchange-traded funds. Those comments are due in January 2002, and Alan Rosenblat, an attorney with Philadelphia-based law firm Dechert, expects that the SEC will release guidelines about that over the course of this year.

This past year was particularly active in terms of mutual fund regulation, according to industry lawyers. A number of initiatives from the Securities and Exchange Commission that had been discussed in recent years, including independent fund director and after-tax reporting issues, came to fruition in 2001.

At the height of the bull market, employee benefits packages were used to recruit new talent, but with massive layoffs occurring across the economy, those packages, including 401(k) benefits, are being trimmed.

NASD Regulation continues to monitor sales of variable annuities and fine dealers who violate suitability rules and record-keeping requirements. Two firms were named in the most recent enforcement action and more actions are possible, industry experts say.

The retail investment arm is launching a new high-net-worth wrap product that allows financial advisers to build, manage and customize portfolios of funds and individually managed accounts.

The Securities and Exchange Commission is apparently close to starting a review of fund rules. However many industry observers are unsure which rules might be affected, and how fund marketing might be affected in turn.

A poor economy and rising unemployment rates are making an already difficult defined contribution market even harder for plan providers. Because plan sponsors are occupied with more pressing business concerns in a difficult economic environment, changing or adding a plan provider to their defined contribution plan is not a priority. That has made gaining market share very difficult for many 401(k) providers, say industry observers.

The Securities and Exchange Commission's caseload was decimated by the terrorist attack on the World Trader Center, the home of its New York offices.

Prudential Financial has appointed Scott Sleyster, the president of its guaranteed products unit, to head the company's retirement services business.