Compliance

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?

NEW YORK - Mutual fund companies that provide products and information online need to be careful they are in full compliance with SEC and NASD regulations because both organizations are starting to interpret their own regulations more narrowly than they have in the past, industry lawyers said.

The SEC has put mutual fund advisers on notice that it is keeping a close eye on the establishment of boards of directors for new funds.

NEW YORK - Mutual fund companies will have until March 31 to comment on a privacy provision in the Financial Services Modernization Act that will prevent fund companies from sharing customer information with third-party non-affiliates.

MIAMI - Regulators will soon be keeping careful watch on mutual fund companies' privacy policies in light of the recently-passed Financial Modernization Act and ensuing mergers and acquisitions, said Paul M. Connolly, first vice president and chief executive officer of Federal Reserve Bank of Boston.

Once is not enough when it comes to defining what makes a fund director independent under Maryland law.

The Securities and Exchange Commission is seeking approval of a fiscal year 2001 budget of $422.8 million, an increase of $45.8 million, or 12 percent, over its fiscal year 2000 budget of $377 million. From 1999 to 2000, the budget increased by 11 percent, up from $338.9 million.

A former employee of Dalbar, a mutual fund consulting and research firm based in Boston, has filed a complaint against the firm, its CEO and four of its officers, charging sexual harassment.

MIAMI - The SEC is giving some hints about the fund companies it may examine as part of its special inspection sweep of selected mutual fund companies on their advertising practices.

The Securities and Exchange Commission voted Feb. 16 to seek comments over the next three months on how to structure international accounting standards that would make it easier to sell mutual funds and securities worldwide.

The SEC may require mutual fund companies and broker/dealers to tell investors more about the special payments fund companies make to broker/dealers for selling funds.