Regulation

As lawmakers debate possible reforms to 401(k) rules in the wake of Enron's financial collapse, Ted Benna, who launched the first 401(k) more than two decades ago, has suggested that workers be barred from spending their own money on stock in their companies.

The Securities and Exchange Commission's comment period on actively managed exchange-traded funds ended last week, but the new type of ETFs that will likely soon be approved by the Commission are those based on fixed-income indices.

Looking ahead to 2002 there are several issues both with mutual fund regulation and proposed legislation that will likely reach some conclusion this year. Late last year, the Securities and Exchange Commission sent out a letter seeking comment on the development of actively managed exchange-traded funds. Those comments are due in January 2002, and Alan Rosenblat, an attorney with Philadelphia-based law firm Dechert, expects that the SEC will release guidelines about that over the course of this year.

This past year was particularly active in terms of mutual fund regulation, according to industry lawyers. A number of initiatives from the Securities and Exchange Commission that had been discussed in recent years, including independent fund director and after-tax reporting issues, came to fruition in 2001.

NASD Regulation continues to monitor sales of variable annuities and fine dealers who violate suitability rules and record-keeping requirements. Two firms were named in the most recent enforcement action and more actions are possible, industry experts say.

The Securities and Exchange Commission is apparently close to starting a review of fund rules. However many industry observers are unsure which rules might be affected, and how fund marketing might be affected in turn.

The Securities and Exchange Commission's caseload was decimated by the terrorist attack on the World Trader Center, the home of its New York offices.

Prudential Financial has appointed Scott Sleyster, the president of its guaranteed products unit, to head the company's retirement services business.

Harvey Pitt has not even been formally sworn in as chairman of the Securities and Exchange Commission, yet already some industry observers are concerned that mutual funds may take a back seat once he takes the wheel.

A House subcommittee approved the Retirement Security Advice Act Thursday afternoon, prompting its proponents to insist that the House will pass it by year's end. It was the quickest markup of a bill in the history of the Committee on Education and the Workforce, lasting a short six minutes. But brewing far from the corridors of those meeting halls is an opposition that hopes for the bill's demise in the Senate.