Compliance

The SEC has adopted a new rule that will require mutual funds to hold at least 80 percent of their assets in securities that are consistent with their names, said SEC Chairman Arthur Levitt, speaking last week to investors attending an SEC town hall meeting in Philadelphia.

WASHINGTON D.C. - An SEC examination has targeted between 30 to 40 mutual funds that are suspected of artificially inflating their quarter-end performance by engaging in a trading scheme known as portfolio pumping, said Lori Richards, director of the SEC's office of compliance, inspections and examinations.

WASHINGTON, D.C. - The SEC is planning to issue additional guidance to the fund industry sometime before April on securities valuations, said Douglas Scheidt, chief counsel for the SEC's division of investment management.

Coming on the heels of the SEC's issuance earlier this month of mutual fund trustee independence rules, the occasion of the new president's inauguration has raised a new question about trustee independence.

WASHINGTON, D.C. - The SEC is planning to issue additional guidance to the fund industry sometime before April on securities valuations, said Douglas Scheidt, chief counsel for the SEC's division of investment management.

Mutual funds should be required to report their fees in dollar figures in their semi-annual reports to shareholders, according to a Securities and Exchange Commission study on fund fees issued last week.

Although the SEC's recently-adopted directors rules do not break new ground, they do codify existing standards and will likely encourage independent directors to seek independent legal representation, according to industry lawyers.

NEW YORK - The SEC this year will finalize its proposed rules that funds invest, under normal market conditions, at least 80 percent of their assets in a manner consistent with the name of the fund, said Paul Roye, director of the SEC's division of investment management.

The Securities and Exchange Commission is making minor changes to the new Form ADV rules it adopted in September requiring investment advisers to file the form electronically, the SEC announced late last month.

The Securities and Exchange Commission has adopted new independent directors rules that will require that a fund board's membership be made up of a majority of independent directors instead of the current 40 percent requirement.

When Arthur Levitt announced that he was stepping down as chairman of the Securities and Exchange Commission last month, Washington lawyers predictably began speculating on his replacement almost immediately. It might be some time, however, before President-elect George Bush makes the appointment.

The Securities and Exchange Commission is implementing minor changes to the new Form ADV rules it adopted in September, which require investment advisers to file the form electronically, the SEC has announced.

An administrative law judge has revoked the registration to operate as an investment adviser of Piper Capital Management of Minneapolis, a unit of U.S. Bancorp Piper Jaffray, and fined the firm $2.005 million. The actions, by Judge H. Peter Young, came in an initial decision with regard to allegations brought by the Securities and Exchange Commission. The SEC's division of enforcement, in the decision, characterized the proceeding as "one of the largest and most complex it has ever conducted."

The U.S. District Court of the Eastern District of New York has granted a motion to dismiss a lawsuit charging Prudential Life Insurance Company of America of Newark, N.J. with attaching excessive fees to its variable annuities.

The National Association of Securities Dealers Regulation last week issued a complaint against Dean Witter Reynolds of New York alleging the company used deceptive practices in the marketing of its proprietary bond funds known as Term Trusts.

Earlier this month, NASD Regulation proposed a rule change which would give mutual fund companies more flexibility with regard to related performance' information in fund advertisements, according to Cindy Fornelli, senior advisor to the director of the division of investment management of the Securities and Exchange Commission. While the SEC supports the proposed changes, it would still like to see changes in the rules regarding manager performance, Fornelli said. NASD Regulation is a subsidiary of the National Association of Securities Dealers of Washington, D.C.

The Business Checking Modernization Act, a bill in Congress that would repeal a law prohibiting banks from paying interest on business checking accounts, could create a new major competitor for money market funds.

The SEC has adopted new auditor independence rules with several notable changes from the original rule proposal.

A request by the McGraw-Hill Companies of New York for a public hearing on the Vanguard Group's efforts to add an exchange-traded share class will most likely be denied, allowing Vanguard to launch the new shares, according to industry analysts.

BOSTON -The Securities and Exchange Commission is most likely to investigate fund companies about their allocation of 'hot IPOs' when a firm fails to provide adequate information about their allocations, according to Victoria Hulick, director of