Regulation

A federal court judge has dismissed a lawsuit against T. Rowe Price Associates, giving support to mutual fund industry executives' contentions that fund directors do not lose their independence by serving on more than one mutual fund board.

Worth Bruntjen, a former portfolio manager for the asset management unit of the Piper Jaffray Cos., last week agreed to pay $100,000 to settle SEC charges that he misled investors about his derivative investments from 1992 through at least April, 1994.

The most important issue addressed in this year's SEC letter to CFO's is the requirement that funds include in their reporting of revenue, payments, in cash or kind, they receive from broker/dealers for sending them business. The letter also reminded CFOs of the requirement that funds update their performance bar chart information to reflect the most recent quarterly or year-end performance, said Kenneth Domingues, chief accountant of the SEC's Division of Investment Management.

The SEC has fined three independent fund directors for their alleged conduct in supervising a money market fund whose net asset value (NAV) dropped below $1.00 per share in 1994.

A US Supreme Court action last week is expected to contribute to an increase in the number of patents financial services firms seek.

The shareholder who is suing Fidelity Investments, contending that the mutual fund industry has not passed along to investors the reduced costs which economies of scale bring, owns funds whose expenses have decreased as a percentage of assets, Fidelity says.

In its continuing effort to compel the securities industry to be ready technologically for the turn of the century, the SEC last week said it filed charges against nine transfer agents for allegedly failing to report their Y2K preparedness on new SEC forms.

NASD Regulation (NASDR) has dropped plans which would have required some firms to provide more warnings when selling mutual funds, a proposal which the mutual fund industry had opposed.

Mutual fund companies are increasingly using federal patent and trademark law to help brand and protect their products and services.

The SEC late last month sanctioned the Colorado investment advisory firm which sponsors the ICON Funds for using "inflated" figures in describing the firm's private account performance.