Compliance

BOSTON - The SEC is considering amending its proposed rules on independent directors to relieve directors' relatives from SEC scrutiny, said Paul Roye, director of the SEC's division of investment management. Roye spoke at a meeting of the American Law Institute and the American Bar Association here recently.

BOSTON - In a study examining mutual fund fees, the General Accounting Office has criticized the mutual fund industry and the SEC for not monitoring fees more closely, according to Geoff Bobroff, president of Bobroff Consulting, of East Greenwich, R.I.

James Mehling, a former vice president of New York Life Insurance Company in New York, last week filed a class action lawsuit, charging that New York Life improperly shifted assets held in both a company-sponsored pension plan and a 401(k) plan and used them as seed money for new proprietary institutional mutual funds.

The SEC will review the auditor independence rules of the top five accounting firms, the SEC has announced.

Wolf Haldenstein Adler Freeman & Herz LLP of New York has filed a class action lawsuit in New York Supreme Court against Prudential Securities and affiliates of the AEGON group of companies on behalf of investors who purchased annuities used to fund qualified retirement plans.

Some mutual fund directors are chronically absent from fund board meetings, according to a top SEC official.

The Investment Company Institute has criticized an SEC proposal that would require investment advisers to disclose custodian and administrative fees, soft dollars and disciplinary actions against them.

The McGraw-Hill Companies of New York, parent company of Standard & Poor's, filed a lawsuit against Vanguard Group of Malvern, Pa. charging that Vanguard breached the 15-year-old licensing agreement it had with S&P by registering a new class of exchange-traded shares on three of Vanguard's equity index funds without the index creator's approval.

An SEC administrative law judge has sanctioned two executives of the now defunct Target Income Fund of Glendora, Calif. for their role in filing registration statements on behalf of the fund that failed to include significant facts.

WASHINGTON - The Securities and Exchange Commission will continue to scrutinize the sale of bonus annuities and could issue clarification of or additional rules for the products, according to commission officials.

Claims that the Investment Company Institute is violating federal securities laws are a legal longshot, according to mutual fund industry lawyers.

The Investment Company Institute is violating federal securities laws by collecting membership fees from mutual funds while allowing the organization to be dominated by mutual fund advisory firms, according to a lawsuit two shareholders filed against the trade group last week.

The SEC plans to issue the first in a series of legal bulletins on investment adviser advertising practices by Dec. 31.

WASHINGTON - The SEC should increase its scrutiny and possibly its regulation of investment accounts that may behave like mutual funds but are not required to abide by the same legal requirements as funds, according to the Investment Company Institute.

The SEC has used a low-profile closed-end fund case to make a point about the powers of fund directors and highlight the value of having independent lawyers advise fund directors.

The SEC will not judge whether economies of scale are being passed along to fund shareholders in the form of lower fees in a report the agency expects to issue this summer.

NEW YORK - A rule proposal outlining how mutual funds should report their after-tax returns should be revised to make it less confusing to investors, said Joel M. Dickson, a principal with The Vanguard Group of Malvern, Pa.

NEW YORK - The changing regulatory environment in the mutual fund industry has created ambiguous legal standards that require fund advisers to establish new procedures to protect themselves from enforcement proceedings, said industry lawyers.

It might be called the triple crown of regulatory malfeasance.

BOSTON - The SEC's goal of providing final rules regarding director independence by this summer could be in jeopardy.