Compliance

PALM DESERT, Calif. - The SEC expects to complete its assessment of trends in mutual fund fees and expenses by early this summer, said Paul Roye, director of the SEC's division of investment management. The SEC has completed compiling data for the study and now is working on how it will report the results, Roye said.

The Securities and Exchange Commission will hold a public roundtable on May 23 on investment advisors.

PALM DESERT, Calif. - The SEC might permit an exception to its two percent cap on redemption fees, allowing closed-end funds that are converting to an open-end structure to assess a redemption charge in excess of two percent, according to Paul Roye, director of the SEC's division of investment management.

PALM DESERT, Calif. - Regulators are increasing their scrutiny of mutual fund advertising in light of fund companies' heavy promotion of their 1999 mutual funds' performances.

PALM DESERT, Calif. - The SEC's proposal to require funds to report their after-tax investment performance may prove popular with investors, but it is far from a hit with mutual fund industry lawyers.

Investment Advisers of Minneapolis, Minn. has settled a lawsuit brought against it by a would-be purchaser of a private security the firm held in its IAI Growth & Income Fund, according to a source close to IAI. Terms of the settlement were not disclosed. The security is now in the process of being sold.

The money management industry had become an outpost for scoundrels in the 1930s.

Marianne K. Smythe, a partner in the law firm of Wilmer, Cutler & Pickering of Washington, is chairperson of the Mutual Funds and Investment Management Conference sponsored by the Investment Company Institute and Federal Bar Association being held this week in Palm Desert, Calif. Smythe is a former director and associate director of the SEC's division of investment management. She recently spoke with Mutual Fund Market News reporter Mike Garrity. An edited account of their conversation follows.

Pending legislation in the European Parliament of Luxembourg would allow mutual funds registered in one European country to automatically qualify for a pan-European "passport" that would allow them to sell throughout the European Union. If the bill passes, funds would no longer be required to register in each country. A vote on the bill is expected by late summer.

A federal district court judge has dismissed a lawsuit against T. Rowe Price Associates of Baltimore in which shareholders in the Rowe Price-Fleming International Stock Fund claimed they paid excessive fees. Fund lawyers said the decision provides new clarity about the minimum allegations a shareholder must make for an excessive fee case to be heard.

The SEC has fined and censured the adviser to an Internet fund for failing to file the proper Y2K forms.

KPMG LLP of New York last week saved itself and the accounting industry from the potential of a court case that could have expanded the liability of accountants who audit mutual funds.

Maryland's highest court last week dealt a setback to that state's legislature and the mutual fund industry in the ongoing fight over what makes a mutual fund director independent.

SEC officials last week outlined a rule proposal on how mutual funds should report their after-tax returns.

The SEC has denied several fund companies' requests to raise redemption fees above two percent because a hike would go beyond the costs associated with redeeming shares and would instead act as a penalty, said Cindy Fornelli, senior advisor to SEC director Paul Roye.

WASHINGTON - The regulators who oversee the mutual fund business and the lawyers who advise fund companies are battling about how far the SEC ought to go in regulating mutual fund advertisements.

WASHINGTON - Investors are not the only ones interested in hot initial public offerings.

Mutual fund companies face the prospect of a new SEC examination next year that has little to do with the agency's traditional scrutiny of securities practices and procedures.

WASHINGTON - The SEC expects to propose, this month, new rules for Form ADV, the main disclosure document that investment advisers must file with the agency, said Robert Plaze, associate director of the SEC. The SEC expects the form ultimately will be available on the Internet for investors to review, Plaze said. Plaze spoke here March 4 at an industry conference sponsored by The Practicing Law Institute of New York.

Who says the lion will never lie down with the lamb?