Regulation

The courts have dealt another setback to shareholders challenging the independence of mutual fund directors.

NASD Regulation has posted on its web site, www.NASDR.com, responses to frequently asked questions about NASDR's new non-cash compensation rules for the sale of mutual funds and variable annuities. The information, posted in a question-and-answer format, covers 22 areas which have drawn inquiries from NASD members. The new rules took effect Jan. 1 and limit how sales contests can be used to reward intermediaries for mutual fund and variable annuity sales.

EDGAR Online of Norwalk, Conn., in partnership with National Filing Service of New York, began offering a new service June 14 that will enable companies to file their Schedule 13D and 13G documents via the Internet. The SEC requires individuals or companies to file such documents once they acquire more than five percent of a company.

The Investment Company Institute has prevailed in its dispute with the Securities Industry Association over a proposed change in the law which prohibits transactions between a broker/dealer and its affiliated mutual funds.

Some mutual fund companies appear to be unfairly manipulating the investment performance figures they use in their advertisements, according to a top SEC official.

BOSTON - Harold Baxter and James D. McCall surely would have preferred to spend the Friday afternoon before Memorial Day weekend just about anywhere else. Baxter, CEO of Pilgrim Baxter & Associates of Wayne, Pa., and McCall, up until that day one of Pilgrim Baxter's star portfolio managers, spent roughly 90 minutes sitting within four feet of one another in a worn courtroom here on May 28 as they waited for their lawyers to emerge from closed-door meetings with a Massachusetts Superior Court judge. Judge Patrick J. King, who was scheduled to hear arguments on whether McCall should be released from an employment agreement he signed with Pilgrim Baxter, appeared to be engaged in an effort to broker a settlement in lawsuits between McCall and the firm.

ING Funds has filed with the SEC to create an Internet fund. The registration is expected to become effective in July.

Amicus Networks of Austin, Tex., and Vestment Consulting Services of Bloomington, Minn., have formed an alliance to help mutual funds and other financial service companies meet compliance requirements via the Internet.

WASHINGTON - The leading trade group for broker/dealers is hoping to reach an agreement with the Investment Company Institute on a proposal modifying the rules which prohibit transactions between a broker/dealer and a mutual fund.

A proxy advisory firm has been compelled to do a 180-degree turn on its recommendations to shareholders of the $166 million Emerging Markets Infrastructure Fund, managed by Credit Suisse Asset Management.