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 most important question raised by advertising a closed fund is what fund companies do with the checks that are sent in for the funds, said Geoff Bobroff, president of Bobroff Consulting of East Greenwich, R.I., a mutual fund consulting firm.

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