Money Management Executive Latest News

Fund companies need to practice caution when advertising closed funds and processing assets raised for those funds, said mutual fund analysts and lawyers. Certain practices in handling of the funds could spark lawsuits and may prompt the SEC to establish guidelines on the practice, they said.

The story line seems immediately recognizable. There is a no-load mutual fund company in Denver with great performance and record sales that is expanding its distribution at an opportune time.

Mutual fund companies spent a total of $324 million on advertising in 1999, down slightly from the $331 million they spent in 1998, according to Competitive Media Reporting of New York. However, last year's mutual fund advertising spending was up 75 percent from 1995 when spending was $185 million.

Roberto de Guardiola, a well-known investment banker in the mutual fund industry, has left Putnam, Lovell, de Guardiola & Thornton of San Francisco to form his own firm.

The SEC wants to extend its campaign to eliminate legal-speak in mutual fund prospectuses to documents fund advisers file disclosing key fund information. Extending what is called "plain English" to these documents, known as Form ADVs, is likely to generate more work for lawyers and consultants and add what should be a one-time expense for fund advisers.

Regulators are continuing to warn fund companies about how they advertise their funds' performances.

The Investment Company Institute is urging the SEC to clarify key points in proposed privacy rules in hopes of enabling funds to hold down the cost of providing shareholders notices about their rights to keep personal information confidential.

Putnam Investments of Boston is considering creating a new type of cloned fund sensitive to capital gains taxes, said Gordon Forrester, managing director at Putnam.

A new website, whose purpose is to assist market timers - a goal which conflicts with that of the industry's major trade group - is nevertheless soliciting advertising from the trade group's membership.

Due to a reporting error, MFMN incorrectly wrote that NewRiver Investor Communications is based in Watertown, Mass. In the past year, the company has moved and it is now based in Andover, Mass.