Compliance

Washington, D.C. - The SEC should consider regulating products like separate accounts and hedge funds under the Investment Company Act of 1940 because they are increasingly available to the average investor who perceives them as a type of mutual fund, according to industry leaders.

The SEC will not aggressively enforce the recently adopted Rule FD, or fair disclosure rule and will only prosecute those cases that are clearly in violation of the rule, said Steve Cutler, a deputy director for the SEC's division of enforcement.

CHICAGO - The U.S. Securities and Exchange Commission is not likely to back down on its pending controversial after-tax performance requirement. This was the impression that Susan Nash, the SEC's associate director of the division of investment management, gave at the Investment Company Institute's tax and accounting conference here last week.

CHICAGO - The SEC will be focusing on issues concerning independent directors, a new audit guide, a two percent decrease in capital gains taxes, international SEC examinations and proper valuation, according to SEC officials and industry executives at the ICI tax and accounting conference here last week.

The president of the $105 million closed-end Mentor Income Fund, turned up the heat on a simmering proxy battle

The SEC adopted new rules last week regarding the electronic filing of form ADV that will require all advisers to begin filing Part I of the form electronically by January 2001, the commission announced.

The Securities and Exchange Commission's recent Fair Disclosure Regulation has prompted U.S. fund managers to demand more accurate reporting from European companies, according to a study of U.S. fund managers by Broadgate Consultants of New York.

Founders Asset Management of Denver, adviser to the 11 Dreyfus Founders Funds, has fined tuned its Code of Ethics which governs when and how employees may make personal securities trades. The disclosure was made in a prospectus amendment filed with the SEC Sept. 1.

Churning abuses by broker/dealers usually involve variable annuities or other insurance products, which is why industry attorneys were surprised when the SEC announced last week that it had fined Dean Witter Reynolds, now part of Morgan Stanley Dean Witter of New York, nearly half a million dollars for failing to prevent mutual fund churning by one of the firm's Atlanta brokers.

Legislation introduced in the U.S. House in June that would lower the capital gains taxes investors involuntarily incur as a result of the distributions made within fund portfolios, has received varying reviews from representatives and executives of the mutual fund and annuity industries. The advantages the measure would give the mutual fund industry could drive a wedge between it and the annuities industry.

Insurance companies have increasingly been seeking exemptions under Section 26(b) of the Investment Company Act to substitute one annuity sub-account for another without holding a shareholder vote, raising SEC concerns.

The U.S. District Court for the Southern District of New York has tossed out a motion by Vanguard of Malvern, Pa. to dismiss a lawsuit that Standard & Poor's parent company, McGraw-Hill of New York, brought against Vanguard for using the S&P 500 Index for an exchange-traded class of shares.

Northwestern Mutual Life Insurance Company of Milwaukee, Wis. has been given permission by the Treasury Department's Office of Thrift Supervision to establish a trust company that will offer trust services and investment management services to wealthy clients, the company announced.

The fair disclosure regulation that the SEC approved Aug. 10 is causing widespread concern among mutual fund portfolio managers and analysts that it will stop the flow of corporate information needed to effectively run funds, executives said.

Franklin Templeton Services, Inc., a unit of Franklin Resources of San Mateo, Calif., has sued its previous president for allegedly breaching his $1.17 million severance agreement.

The Securities and Exchange Commission has granted its first no-action letter easing the personal holdings requirements for independent directors of a fund's investment advisor. The decision puts the SEC's treatment of independent directors of a fund's investment advisor on more equal footing with the independent directors of a mutual fund company.

Shareholders of Phoenix Investment Partners of Hartford, Conn. have filed a class-action lawsuit against Phoenix Home Life Mutual Insurance Company, charging its offer to buy out the firm is far undervalued.

In a rare but not unprecedented occurrence, the shareholders of a small fund are being asked to renew the fund's investment advisory contract, so that the advisor can be paid for the first time in nearly a year.

Transamerica Life Insurance Company of Canada fired three employees and suspended 17 in a trading scandal involving one of the firm's offshore funds based in Luxembourg, said Barry Francis, a spokesperson for the company.

The Investment Company Institute of Washington D.C., filed a motion July 28 to dismiss a complaint against it alleging the industry association has violated federal securities laws by aligning too closely with fund advisers, according to the motion.