Compliance

The shareholder who is suing Fidelity Investments, contending that the mutual fund industry has not passed along to investors the reduced costs which economies of scale bring, owns funds whose expenses have decreased as a percentage of assets, Fidelity says.

In its continuing effort to compel the securities industry to be ready technologically for the turn of the century, the SEC last week said it filed charges against nine transfer agents for allegedly failing to report their Y2K preparedness on new SEC forms.

NASD Regulation (NASDR) has dropped plans which would have required some firms to provide more warnings when selling mutual funds, a proposal which the mutual fund industry had opposed.

Mutual fund companies are increasingly using federal patent and trademark law to help brand and protect their products and services.

The SEC late last month sanctioned the Colorado investment advisory firm which sponsors the ICON Funds for using "inflated" figures in describing the firm's private account performance.

Tocqueville Asset Management is the latest interim fund adviser to feel the heat as fund trustees increasingly flex their mutual fund governance muscles.

Regulators have stepped up pressure in recent weeks on mutual fund companies and those who sell funds regarding their costs and disclosure of those costs.

The SEC has sued a former money market fund portfolio manager for fraud, saying he misled investors about the value of derivatives he purchased for the funds.

SEC examiners will conduct special audits - possibly as early as next month - of mutual fund companies and other investment advisers who may be having trouble meeting year 2000 programming targets.

Mutual funds seeking to reclaim assets from overseas companies which default on bonds may enjoy a moral victory but little financial satisfaction from an anticipated U.S. Supreme Court decision.

WASHINGTON -- Some mutual funds are coming up short in their efforts to meet new Securities and Exchange Commission rules which require improved disclosure in fund prospectuses, said Paul F. Roye, the director of the SEC's Division of Investment Management last week.

The SEC last week proposed changes which it says will simplify the form which mutual funds use to close down a fund. The proposed changes will amend Rule 8f-1 of the Investment Company Act and Form N-8F. The industry has until Feb. 5 to comment on the proposal.

The Massachusetts legislature has approved and sent to Acting Gov. Paul Cellucci a bill which would make Massachusetts law essentially identical to federal law in defining what makes a mutual fund director independent. Both the state House of Representatives and the state Senate approved the bill last month, according to state records.

It will take more than high fees, from now on, to prove that an independent fund director is not independent.

The STI Classic Funds is on the verge of settling a portion of a class action lawsuit which it brought against Bollinger Industries, the exercise equipment manufacturer, and securities firms which participated in Bollinger's Nov., 1993 initial public offering.

A proposed shorter disclosure document for Canadian mutual fund investors is an improvement over earlier forms, but needs to be made even simpler, industry officials say.

A recent federal court decision is causing mutual fund industry lawyers to have reservations about simplifying fund prospectuses even as mutual fund companies are redoubling their efforts to produce the revised documents.

Fidelity Investments' so-called vulture investing practices in the early 1990s are under attack in a Texas state court.

Federal regulators are reviewing a proposed rule from the National Association of Securities Dealers that would let bond mutual funds publish volatility ratings in their sales literature for an 18-month trial period.

Selling funds through mutual fund supermarkets may start taking a larger bite out of profits for the companies which advise mutual funds.