Practice

Mutual funds seeking to reclaim assets from overseas companies which default on bonds may enjoy a moral victory but little financial satisfaction from an anticipated U.S. Supreme Court decision.

WASHINGTON -- Some mutual funds are coming up short in their efforts to meet new Securities and Exchange Commission rules which require improved disclosure in fund prospectuses, said Paul F. Roye, the director of the SEC's Division of Investment Management last week.

The SEC last week proposed changes which it says will simplify the form which mutual funds use to close down a fund. The proposed changes will amend Rule 8f-1 of the Investment Company Act and Form N-8F. The industry has until Feb. 5 to comment on the proposal.

The Massachusetts legislature has approved and sent to Acting Gov. Paul Cellucci a bill which would make Massachusetts law essentially identical to federal law in defining what makes a mutual fund director independent. Both the state House of Representatives and the state Senate approved the bill last month, according to state records.

It will take more than high fees, from now on, to prove that an independent fund director is not independent.

The STI Classic Funds is on the verge of settling a portion of a class action lawsuit which it brought against Bollinger Industries, the exercise equipment manufacturer, and securities firms which participated in Bollinger's Nov., 1993 initial public offering.

A proposed shorter disclosure document for Canadian mutual fund investors is an improvement over earlier forms, but needs to be made even simpler, industry officials say.

A recent federal court decision is causing mutual fund industry lawyers to have reservations about simplifying fund prospectuses even as mutual fund companies are redoubling their efforts to produce the revised documents.

Fidelity Investments' so-called vulture investing practices in the early 1990s are under attack in a Texas state court.

Federal regulators are reviewing a proposed rule from the National Association of Securities Dealers that would let bond mutual funds publish volatility ratings in their sales literature for an 18-month trial period.