Regulation

Sloan Financial Group of Durham, N.C. has filed a lawsuit against a former employee charging him with breach of contract, committing fraud and conspiracy, and embezzling funds while he managed The New Africa Opportunity Fund, a $120 million private equity fund that was introduced in 1997.

The U.S. House Financial Services subcommittee on capital markets, insurance and government-sponsored enterprises, chaired by Rep. Richard Baker (R-La.), will review securities-disclosure rules this year, Baker announced last month. Among those to be reviewed will be the "Regulation Fair Disclosure" that the Securities and Exchange Commission adopted last year.

AIM Management Group, the Canadian operations of AIM Funds of Houston, announced that it has settled out of court a lawsuit it brought against a former employee, Derek Webb, and C.I. Fund Management of Toronto, according to a joint release from the companies. The terms of the settlement are confidential, the companies said.

Mutual fund shareholders are increasingly wary about taxes on their investments and say that taxes are an important investment consideration, according to a recent survey.

President Bush has designated Laura Unger acting chairwoman of the Securities and Exchange Commission, replacing Arthur Levitt who stepped down Feb. 9.

The recent decision of The Investment Company Institute, the industry trade group in Washington, D.C., to report exchange-traded fund flows is significant because it marks the industry's acceptance of a non-traditional fund product and could promote wider acceptance of the product, according to industry analysts.

NEW YORK - The after-tax disclosure regulations that were recently adopted by the Securities and Exchange Commission have several major flaws which will potentially hurt, not help, fund shareholders, according to Matthew Fink, president of the Investment Company Institute, who spoke here last week.

A pension reform bill that would increase retirement savings contribution limits and streamline the process for setting up retirement plans for small businesses will be introduced in the House of Representatives this week, according to Elizabeth Gregory, a spokesperson for The Financial Services Roundtable of Washington, D.C., a financial services company association.

Lance Brofman, a former principal of Fundamental Portfolio Advisors, a now defunct mutual fund group in New York, has been fined $250,000 by an SEC administrative law judge in New York and barred for life from associating with a broker/dealer, investment adviser or investment company.

The Securities and Exchange Commission, long the scourge of fund marketing departments, may have given marketers something to smile about in adopting new regulations on after-tax disclosure of performance information. The new regulations, which require funds to post before and after-tax performance information in prospectuses and advertisements promoting funds' tax management, provide some funds a new approach to marketing their product, said industry executives. The regulations were adopted Jan. 19.