Recommendations outlined in the Securities and Exchange Commission's April 30 valuation letter will create logistical challenges for small- and mid-sized fund companies and raise questions as to when fund boards should use fair value pricing, according to industry lawyers and observers.

The letter, written by Douglas Scheidt, associate director and chief counsel for the SEC, addresses valuation issues relating to when funds should establish fair values for securities instead of relying on market quotations. The letter was written to address questions and issues raised by a similar valuation letter the SEC issued in 1999. But, the most recent letter raises a new set of questions and problems, lawyers said.

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