Regulation

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.

It could get a little easier for mutual fund companies to issue press releases next year.

Investment advisers who get caught trying to steer pension business their way by showering elected officials with campaign cash may be forced to work without fees under a new rule proposed by the SEC.

Mutual fund marketing and compliance executives seize on SEC regulators' every word, much as portfolio managers scrutinize even an offhand remark from Federal Reserve Chairman Alan Greenspan. So, a SEC compliance director's recent admonition about the allocation of initial public offering shares had mutual funds wondering if the SEC was planning to regulate this area.

Pilgrim Baxter & Associates didn't have to air any of its dirty laundry last week in Massachusetts Superior Court.

The mutual fund industry is now mulling the implications of the recent courtroom encounter between money manager Louis Navellier, of Navellier Investment Management of Reno, Nev., and three independent fund trustees.