Practice

If Ted Benna, the originator of the concept of 401(k)'s, has his way, 401(k)'s could become completely flexible, portable, and participant-directed within the next ten years.

Founders Asset Management of Denver, adviser to the 11 Dreyfus Founders Funds, has fined tuned its Code of Ethics which governs when and how employees may make personal securities trades. The disclosure was made in a prospectus amendment filed with the SEC Sept. 1.

Churning abuses by broker/dealers usually involve variable annuities or other insurance products, which is why industry attorneys were surprised when the SEC announced last week that it had fined Dean Witter Reynolds, now part of Morgan Stanley Dean Witter of New York, nearly half a million dollars for failing to prevent mutual fund churning by one of the firm's Atlanta brokers.

If new employees were automatically enrolled in 401(k)'s, mutual fund companies might collect assets from the 15 percent of the population that fail to sign up for 401(k)s, fund executives and consultants said.

Legislation introduced in the U.S. House in June that would lower the capital gains taxes investors involuntarily incur as a result of the distributions made within fund portfolios, has received varying reviews from representatives and executives of the mutual fund and annuity industries. The advantages the measure would give the mutual fund industry could drive a wedge between it and the annuities industry.

Insurance companies have increasingly been seeking exemptions under Section 26(b) of the Investment Company Act to substitute one annuity sub-account for another without holding a shareholder vote, raising SEC concerns.

Standard & Poor's Retirement Services, the investment advisory subsidiary of Standard & Poor's Investment Services of New York, has received an exemption to the Employee Retirement Income Security Act. The exemption will safeguard it and plan sponsors who use its services against fiduciary liability.

The U.S. District Court for the Southern District of New York has tossed out a motion by Vanguard of Malvern, Pa. to dismiss a lawsuit that Standard & Poor's parent company, McGraw-Hill of New York, brought against Vanguard for using the S&P 500 Index for an exchange-traded class of shares.

Northwestern Mutual Life Insurance Company of Milwaukee, Wis. has been given permission by the Treasury Department's Office of Thrift Supervision to establish a trust company that will offer trust services and investment management services to wealthy clients, the company announced.

The fair disclosure regulation that the SEC approved Aug. 10 is causing widespread concern among mutual fund portfolio managers and analysts that it will stop the flow of corporate information needed to effectively run funds, executives said.