Regulation

The Supreme Court heard arguments last week in a case seeking to eliminate a state's right to issue tax-free municipal bonds for paper concerning its own state, but to tax out-of-state municipal bonds.

The digital age continues to make inroads at the Securities and Exchange Commission, as the SEC said on Nov. 2 it is considering a plan to permit fund managers to file applications for exemptive relief, or variances from agency procedures, over the Internet. The industry has through Dec. 14 to comment on the proposal.

After more than a decade of fits and starts for prospectus profiles, it appears that both the mutual fund industry and the Securities and Exchange Commission are finally comfortable with the idea.

Amid the sobering talk of a possible recession, there were two pieces of news last week that are cause for additional consternation. First, bond guru Bill Gross of Pimco warned that the subprime crisis could linger for another two years, wiping out another $250 billion in loan defaults through the end of next year on top of the $900 billion worth of current questionable collateralized debt obligations and subprime loans.

The Financial Industry Regulatory Authority has fined Oppenheimer & Co. $1 million for intentionally submitting inaccurate mutual fund breakpoint data and for failing to properly supervise its brokers.

It's been four years since Noreen Harrington has appeared on the scene, but she recently spoke before an industry group on why she blew the whistle on the market timing and late trading at Canary Capital, setting off the shocking scandal that rocked the fund industry, cost it $5 billion in fines and nearly tarnished its reputation forever.

WASHINGTON-The Securities and Exchange Commission is interested in reducing mutual fund operational risk, improving disclosure and helping boards better assess soft dollars, according to Andrew J. Donohue, director of the division of investment management.

It's been four years since Noreen Harrington has appeared on the scene, but she recently spoke before an industry group on why she blew the whistle on the market timing and late trading at Canary Capital, setting off the shocking scandal that rocked the fund industry, cost it $5 billion in fines and nearly tarnished its reputation forever.

Hedge funds in Europe have just proposed that they self-police, in an attempt to ward off regulation. They are offering to volunteer information about their holdings, risk management, governance and valuation techniques.

Like death and taxes for the rest of us, Securities and Exchange Commission oversight will always be a concern for the mutual fund industry.