Regulation

The SEC, which increasingly is examining the securities trading practices of money managers, has sued an investment adviser for allegedly failing to get the best execution of trades for its clients.

Van Kampen Investment Advisory Corp. of Oakbrook, Ill. and former company chief investment officer Alan Sachtleben have agreed to pay $125,000 in fines for what the SEC said was misleading advertising about the performance of the Van Kampen Growth Fund. The SEC announced the settlement Sept. 8.

NASD Regulation has proposed a rule to bar broker/dealers from paying registered representatives more for selling proprietary mutual funds than for selling funds offered by outside fund companies. The practice of paying representatives more for selling house funds can create a conflict of interest between representatives and their clients, NASDR said in issuing the rule proposal Sept. 2. NASDR members have until Oct. 29 to comment on the proposal. In June, NASDR officials said they expected to issue such a proposal to ban extra pay for proprietary sales this summer. (MFMN, 7/12/99)

Complex derivatives are unnerving that part of the accounting industry that audits mutual funds.

Investors in the $40 million Navellier Aggressive Small Cap Equity Fund may not have to pay the costs of a lawsuit between the fund's adviser and two of its trustees.

The SEC has sanctioned a Phoenix firm that frustrated a handful of closed-end funds with its controversial tactics - known as mini-tender offers - to buy fund shares from individual investors.

The SEC is continuing to press the money management industry on year 2000, or Y2K, computer programming and compliance issues.

The newly adopted rules that govern the personal trading practices of portfolio managers contain few changes from the SEC's original proposal four years ago, regulators, mutual fund lawyers and consultants said last week.

Although Congress included much of what the mutual fund industry sought in a major tax cut bill - the Financial Freedom Act of 1999 - that legislation is likely to be vetoed by President Clinton next month.

Mutual fund companies and the SEC are watching developments at General American Life Insurance Company of St. Louis, Mo. A handful of fund companies, including OppenheimerFunds of New York, Federated Investors of Pittsburgh, Northern Trust Corp. of Chicago and Alliance Capital Management LP of New York, hold in their money market funds, short-term funding agreements issued by General American. The firm was placed under the supervision of Missouri insurance regulators Aug. 11. Representatives of the funds said they expect their investments will be repaid. "It's illiquidity, not insolvency," said J.T. Tuskan, a spokesperson for Federated. The SEC is monitoring the situation, a spokesperson said.