Regulation

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.

The former chief investment officer for Mitchell Hutchins Asset Management of New York has agreed to pay $10,000 to settle SEC charges that she failed adequately to supervise a portfolio manager's investment and securities pricing practices.

Charles F. Parisi, a California financial services executive, allegedly worked with his brother and a colleague to dupe fund board members, insurance companies and portfolio managers about Parisi's troubled past and conceal Parisi's role in a firm which managed a trust used in variable annuities, the SEC alleged last week.

A United States District Court judge has fined a former Los Angeles mutual fund manager $1 million in restitution, interest and penalties for misrepresenting the value of two worthless funds as $138 million, combined, to two brokerage firms in order to obtain margin loans.

A tight labor market in the mutual fund industry is creating new business for courtroom lawyers - filing suit on behalf of money management firms to enforce the non-compete provisions in executives' employment agreements.

SAN DIEGO, Calif. - The Securities and Exchange Commission in November will adopt corporate governance regulations to strengthen the role of independent directors, an SEC official told attendees of the Investment Company Institute's tax and accounting conference here last week. The SEC had initially said it would issue new regulations in the summer.