Regulation

Claims that the Investment Company Institute is violating federal securities laws are a legal longshot, according to mutual fund industry lawyers.

The Investment Company Institute is violating federal securities laws by collecting membership fees from mutual funds while allowing the organization to be dominated by mutual fund advisory firms, according to a lawsuit two shareholders filed against the trade group last week.

The SEC plans to issue the first in a series of legal bulletins on investment adviser advertising practices by Dec. 31.

WASHINGTON - The SEC should increase its scrutiny and possibly its regulation of investment accounts that may behave like mutual funds but are not required to abide by the same legal requirements as funds, according to the Investment Company Institute.

The SEC has used a low-profile closed-end fund case to make a point about the powers of fund directors and highlight the value of having independent lawyers advise fund directors.

The SEC will not judge whether economies of scale are being passed along to fund shareholders in the form of lower fees in a report the agency expects to issue this summer.

NEW YORK - A rule proposal outlining how mutual funds should report their after-tax returns should be revised to make it less confusing to investors, said Joel M. Dickson, a principal with The Vanguard Group of Malvern, Pa.

NEW YORK - The changing regulatory environment in the mutual fund industry has created ambiguous legal standards that require fund advisers to establish new procedures to protect themselves from enforcement proceedings, said industry lawyers.

It might be called the triple crown of regulatory malfeasance.

BOSTON - The SEC's goal of providing final rules regarding director independence by this summer could be in jeopardy.