The SEC has made it easier for funds to redeem the holdings of affiliates and large shareholders in securities rather than cash, a move industry accountants and lawyers say should reduce fund costs and ease operational headaches.

Mutual funds can redeem the holdings of large investors in securities so long as the funds satisfy six key guidelines, the SEC said in an interpretive letter dated Dec. 28. Funds that satisfy the requirements can redeem shareholders in securities rather than cash - a move known as an in-kind redemption - without seeking special regulatory approval from the SEC, David W. Grim, SEC special counsel, said in the so-called no-action letter.

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