The SEC is expected to issue guidance soon on how mutual funds should value their securities, an issue of critical importance to the fund industry that the SEC has not systematically addressed in more than 25 years.

Paul Roye, director of the SEC's division of investment management, plans to offer fund executives and lawyers direction on when it is appropriate for funds to switch from using market prices to value securities to the so-called fair value method, according to industry lawyers and others familiar with Roye's current plans. The guidance also may discuss the role that mutual fund directors play in the valuation process, according to those familiar with the matter.

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