Regulation

If the Financial Services Modernization Act of 1999 is enacted, mutual fund companies will buy insurance and banking companies while at the same time becoming acquisition targets of those same firms, industry consultants say. The bill would spur a race to offer clients a wide array of investment products, they say.

A handful of mutual funds that invest in the securities of Taiwanese companies were slow to respond after an earthquake forced the closing of the Taiwan stock market for a week, said Paul Roye, director of the SEC's division of investment management.

WASHINGTON - The SEC will continue to pay attention to mutual fund advertising, but it is potential scrutiny of fund ads by plaintiffs' lawyers that is giving some industry participants pause.

WASHINGTON - If the test for success for new regulations is that they contain a little something to annoy just about everyone, the SEC staff has hit a home run with the rules it has proposed for mutual fund directors.

It was not a resounding victory for those who want to job hop, but top executives who formerly worked at State Street Global Advisors of Boston have been allowed to join a competitor despite a non-compete agreement SSgA contends prohibited the move.

The Securities and Exchange Commission is proposing a new rule that would formally permit mutual fund companies to invest in repurchase agreements (repo's) and pre-refunded bonds (pre-re's). Since the early 1980's, the SEC has not taken an official position but has informally viewed repo's and pre-re's as collateralized investments. It has done this by responding with so-called no-action letters to requests from fund companies to invest in repos and pre-re's.

Five independent fund trustees have won a small victory in a lawsuit originally filed against them as well as Investment Adviser's, Inc., the mutual fund adviser in Minneapolis, Minn., and the IAI Value Fund. Investment Adviser's is a subsidiary of Lloyds TSB of London.

Independent mutual fund directors must provide more information about themselves and, in some cases, their families but also stand to receive valuable protection if the SEC eventually adopts new and revised rules and guidelines that the agency proposed last week.

A nasty proxy fight should draw closer to a conclusion Friday when the shareholders of the closed-end Portugal Fund vote on a series of proposals which could convert the fund to an open-end structure and give closed-end fund activist Ronald Olin a seat on the fund's board of directors.

Auditors of mutual funds may shortly have new guidelines for when personal investments in mutual funds are permissible.