Compliance

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.

BOSTON - The SEC may ease its original stand on the amount of personal information mutual fund directors must disclose in SEC filings about the business relationships of members of their extended families, according to a high-ranking SEC official.

BOSTON - A U.S. District Court judge has expressed skepticism about a shareholder's claim that Fidelity Investments of Boston had biased its mutual funds' independent directors and charged funds excessive fees.

The Maryland Court of Appeals should uphold the constitutionality of a state law on mutual fund directors, according to mutual fund firms and fund and securities industry trade groups.

Broker/dealers could face pressure to provide investors with an unprecedented amount of detail about the special sales payments they receive from mutual funds and mutual fund companies as the result of a class action lawsuit that is moving slowly through the federal courts.

The SEC has suffered a pair of setbacks in its attempts to discourage intermediaries from recommending that their clients sell funds after holding them for only a short time and then use the proceeds to buy new, hot-performing funds.

The mutual fund industry is rallying to support a Maryland law that says mutual fund directors do not lose their independence because they get paid for serving on several fund boards in the same mutual fund complex.

The SEC last week won a key case in its efforts to discourage registered representatives from selling class B shares of mutual funds when cheaper A shares are available.

The Investment Company Institute has announced its support for an SEC proposal that would allow joint liability insurance coverage to be purchased on behalf of a fund adviser, its officers and its fund directors.

The mutual fund world can expect to hear and read a lot more in the next few weeks about the independence of mutual fund directors, thanks to several events.

Mutual fund investors are better served by following a "buy and hold" investment strategy rather than moving in and out of top performing funds, according to the SEC.