The General Accounting Office's report on fund profitability, which draws no conclusion as to whether fund companies have taken advantage of economies of scale to reduce fees but does encourage more disclosure of fees, has elicited a range of responses. It has been dismissed by some industry analysts as a self-serving move by politicians and welcomed by consumer advocates.

The Rupay-Barrington Financial Group of Arlington, Tex. issued a statement July 17 denying knowledge of a lawsuit the SEC filed against the firm accusing it of fraud. The SEC's charges were posted on its website July 12, and accuse the company of making improper loans to its affiliates resulting in inflated net asset values of its three funds. It also charges the companies with illegally suspending investor's redemptions, according to the SEC filing.

The Investment Company Institute has asked the SEC to make changes in its after-tax rule proposal that would reduce the quantity of data funds would be required to disclose and would mean funds have to include the data in prospectuses only, not in annual reports as well.

The Investment Company Institute of Washington, D.C. last week announced its support of legislation that would revamp ERISA regulations to allow 401(k) plan providers to offer employees advice.

The Securities and Exchange Commission is considering allowing fund companies to shorten their bi-annual shareholder reports, according to a spokesperson for the SEC.

A bill introduced in the House of Representatives would exempt from federal taxes up to $3,000 in mutual fund capital gains fund investors must accept even though they have not sold their fund shares. For investors filing joint returns, that exemption would be doubled to $6,000.

The SEC's final privacy regulation substantially departs from its initial proposal and allows fund companies to issue shorter, more general privacy statements than they originally would have had to, industry attorneys said.

The SEC is considering delaying revisions to the principal form investment advisors must file concerning their business practices because of objections raised to the proposed revisions.

The SEC has proposed new rules to protect auditor independence that will place new responsibilities on mutual fund companies.

The SEC has charged Founders Asset Management LLC of Denver with defrauding its clients in a soft-dollar arrangement with an investment advisor, according to an SEC filing. The commission has issued $790,000 in fines against the firm and Bjorn Borgen, its former president.

NEW YORK - While there are no clearly defined compliance standards for best execution trade practices, firms that do not use electronic commerce networks to conduct any of their trades raise SEC concerns, according to an SEC official.

BOSTON-The SEC is concerned that increasing competitive pressures the mutual fund industry faces could lead it to engage in misleading or overly aggressive advertising, said Paul Roye, director of the SEC's division of investment management.

A suit charging that New York Life Insurance Co. breached its fiduciary duty as a sponsor to two pension plans and two 401(k) plans, is entirely without merit, the company said in a statement issued prior to the suit's filing.

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.