E*Trade Funds of Palo Alto, Calif. has asked the SEC to permit the fund group to automatically redeem shareholders who, after investing in an E*Trade fund, seek paper rather than electronic copies of fund documents.

The proposal, which industry lawyers and accountants described as the first of its kind, is now pending with the SEC's division of investment management as a request for a no-action letter - essentially an opinion from the SEC staff that the proposed plan will not prompt an SEC lawsuit. E*Trade made the no-action request as part of an effort to keep fund expenses low, said Brian Murray, president of E*Trade Funds, in an interview last week.

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