Practice

WASHINGTON, D.C. - Two class action suits involving the use of proprietary funds with in-house pension plans have opened the door for class action lawyers who are likely to go after other mutual fund companies, according to industry lawyers.

WASHINGTON, D.C. - It has been over nine months since E-SIGN, the Electronic Signatures in Global and National Commerce Act, was signed into law, but there remains some uncertainty with regard to how the act governs certain aspects of electronic delivery of retirement products and services, according to industry executives.

The Security and Exchange Commission has proposed changes to rules which govern electronic record keeping.

A decision was overturned earlier this month in the lawsuit Green v. Fund Asset Management, in which shareholders in seven Merrill Lynch funds have sued the company for engaging in fraud with regard to management fees.

Twenty percent of the nation's 37 million 401(k) plan participants who seek outside investment advice, rely on advice from mutual fund representatives, according to a new study from Spectrem Group of Chicago. That is largely because the majority of plan sponsors, 84 percent, offer no investment advisory services to their employees, according to the study. The results of the study were released by Spectrem Group last week.

Paul G. Murphy, a former vice president of Putnam Investments of Boston, was convicted of one count of conspiracy for his part in aiding another Putnam employee in illegally wire transferring $78,909 from an internal Putnam account to another account at the Vanguard Group in Malvern, Pa. in October of 1999, according to a statement released by the U.S. Attorney's office.

A U.S. District Court order issued late last month placing three of the high-yield municipal bond funds of the Heartland Group of Milwaukee in receivership probably will lead to liquidation of the funds. But it may also be a prelude to new guidance and regulation on fund valuation procedures, according to industry analysts and lawyers.

The Dreyfus Corporation of New York has tentatively agreed to pay $20.5 million to settle a federal class action lawsuit and a state lawsuit which were brought against the fund company in the summer of 1998 by investors in two Dreyfus mutual funds.

A Securities and Exchange Commission rule initiative that was strongly criticized by consumer groups several years ago when it was first suggested has reappeared on the SEC's docket as part of an impending rule proposal expected by June 28.

The Council of the European Union has approved legislation that would allow fund companies to sell in any European Union country, as long as the fund is registered in one of them.