Regulation

A written agreement that established specific guidelines on how a market timer could time investments in AIM Asset Management's funds is the subject of a lawsuit filed by the market timer against AIM's transfer agent.

BOSTON - A form of mutual fund style drift is now being examined by the Securities and Exchange Commission in its review of mutual funds and their performance advertising practices.

A hearing held May 1 on a request by Scudder Kemper Investments of Boston for a preliminary injunction against Robert Hoffman, Scudder's former managing director, gave no clues as to the possible outcome of pending arbitration between the two parties, according to an industry lawyer.

The SEC is looking into how fund companies process money earmarked for closed funds, said Cindy Fornelli, an advisor to Paul Roye, director of the SEC's division of investment management.

A hearing on a request by Scudder Kemper Investments of Boston for a preliminary injunction against Robert Hoffman, Scudder's former managing director, is scheduled for May 1. A hearing was scheduled after Scudder filed a complaint in U.S. District Court April 17 alleging Hoffman is violating terms of a separation agreement he signed with the firm. If issued, the injunction would prohibit Hoffman from hiring Scudder-Kemper employees or soliciting any of its clients. A temporary restraining order to prevent Hoffman from hiring Scudder employees was issued when the complaint was filed.

Mutual fund companies and registered investment advisors need to do more to monitor the accuracy of the information on their websites, according to a top SEC official.

The SEC wants to extend its campaign to eliminate legal-speak in mutual fund prospectuses to documents fund advisers file disclosing key fund information. Extending what is called "plain English" to these documents, known as Form ADVs, is likely to generate more work for lawyers and consultants and add what should be a one-time expense for fund advisers.

Regulators are continuing to warn fund companies about how they advertise their funds' performances.

It has not taken the SEC long to make sure the mutual fund industry is following the practices outlined in a letter the agency issued in December.

The Securities and Exchange Commission March 28 charged Monetta Financial Services of Wheaton, Ill. with failure to disclose initial public offering holdings in two of its funds in their quarterly statements.