Regulation

A lawsuit filed April 2 in a Delaware state court could decide if a closed-end fund's board of directors acted properly in setting strict guidelines as to who qualifies for nomination as a fund board director, or if the guidelines were established to thwart shareholder activism and impede investors' rights.

President Bush's budget proposal for fiscal year 2002 proposes staff reductions in several areas of the Securities and Exchange Commission, including in the office of investment management which oversees mutual funds, according to an SEC document.

The first wave of privacy disclosures are appearing in mutual fund prospectuses and first quarter 2000 account statements being mailed to fund investors.

The Investment Company Institute of Washington D.C. has taken the unusual step of submitting a follow up letter to an earlier request that the Securities and Exchange Commission regulate portfolio products like mutual funds.

Laura Unger, acting chairman of the Securities and Exchange Commission, announced in a speech before the Philadelphia Bar Association late last month that the SEC's staff is working on an interpretive bulletin which will emphasize that technical compliance with Rule 482, the advertising rule, will not protect firms from charges of fraud. Unger said the bulletin will also point out that it may be necessary to provide investors with additional facts, which give investors an accurate picture of a fund's performance in order to avoid running afoul of anti-fraud provisions.

KPMG of New York resigned as independent auditor for AIM Funds of Houston last December after the accounting firm discovered it was in violation of auditor independence rules, according to a Security and Exchange Commission filing submitted March 27 by AIM.

A fund's sub-adviser can open new distribution channels, provide investment expertise, lend name recognition and, in some cases, create a conflict of interest, according to industry lawyers and observers.

WASHINGTON, D.C. - Two class action suits involving the use of proprietary funds with in-house pension plans have opened the door for class action lawyers who are likely to go after other mutual fund companies, according to industry lawyers.

WASHINGTON, D.C. - It has been over nine months since E-SIGN, the Electronic Signatures in Global and National Commerce Act, was signed into law, but there remains some uncertainty with regard to how the act governs certain aspects of electronic delivery of retirement products and services, according to industry executives.

The Security and Exchange Commission has proposed changes to rules which govern electronic record keeping.