Regulation

There is a new headache and expense coming for mutual fund companies this year - privacy compliance.

In light of the Securities and Exchange Commission's report that auditors at PricewaterhouseCoopers of New York compromised their independence with their mutual fund and other securities holdings, the SEC might cite other accounting firms for putting their independence in question, said accounting industry lawyers and executives.

The high cost of retaining key mutual fund executives and concerns about lawsuits have produced what may become a common ingredient in mutual fund company acquisitions -

In calculating fund expense ratios, funds may only reduce total expenses by contractual fee waivers or reimbursements, the SEC is reminding fund advisers in its annual, "Dear CFO" letter.

The SEC has made it easier for funds to redeem the holdings of affiliates and large shareholders in securities rather than cash, a move industry accountants and lawyers say should reduce fund costs and ease operational headaches.

Warning: A large diet of initial public offerings may be hazardous to your investment health.

The SEC is prepared to look back before Dec. 8 to sue mutual fund companies if the agency finds apparent violations of the pricing policies outlined in a letter the agency issued last month.

The SEC is considering a rule change that could save mutual funds millions of dollars each year by creating a new, abbreviated mutual fund document that would take the place of lengthy fund prospectuses under some circumstances.

Mutual fund advisory firms have a troubling conflict of interest that may cause them to pull their punches in some proxy votes, according to SEC Commissioner Paul R. Carey.

The two-and-a-half-year-old struggle between Navellier Investment Management of Reno, Nev. and two former independent fund directors is once again heating up with lawsuits being filed by both sides. Navellier has filed a new lawsuit against one former fund trustee who has reciprocated with his own lawsuit. A second former trustee is contemplating filing a similar lawsuit.