The Investment Company Institute of Washington, D.C., has suggested changes in an SEC rule proposal governing how mutual funds oversee their securities held in foreign countries. The ICI said it was troubled by language in the proposed amendment to rule 17f-5 of the Investment Company Act and a proposed new rule 17f-7. Together, the rule proposals, which require a fund's global custodian to monitor the risk of using sub-custodians in foreign countries under certain circumstances, could effectively prohibit funds from investing in some countries, the ICI said. The SEC should adopt language in the rule making it clear that funds could use a foreign sub-custodian, despite risks associated with the firm, the ICI said in a letter dated July 15 to the SEC.

NEW YORK - Scudder Kemper Investments of New York successfully thwarted an attempt by arbitrageur Phillip Goldstein to stop a shareholder vote that combined the issues of whether to open a fund and impose a redemption fee on those cashing out of the newly-opened fund.

A U.S. District Court jury in San Francisco found in favor of the three former independent mutual fund trustees being sued by Louis Navellier and his asset management firm, Navellier Investment Management of Reno, Nev.

For the second time in a month, regulators have issued a warning to mutual fund companies on their advertising practices.

While ensuring auditor independence may make good business sense in the mutual fund industry, actually achieving it may be very difficult. But, difficult as it may be, it is a problem that mutual fund companies and accounting firms will no doubt have to tackle in the near future.

NASD Regulation has postponed indefinitely the idea of adopting new rules which would have changed the way mutual fund companies pay broker/dealers for sales.

The Investment Company Institute's new voluntary guidelines for mutual fund directors could increase the turnover of fund directors by more than one-third in the next five years, according to an industry consultant.

A system which some industry lawyers say has become an anachronism for large mutual fund complexes - having one board of directors for each mutual fund in a complex - may be headed for extinction.

The courts have dealt another setback to shareholders challenging the independence of mutual fund directors.

NASD Regulation has posted on its web site, www.NASDR.com, responses to frequently asked questions about NASDR's new non-cash compensation rules for the sale of mutual funds and variable annuities. The information, posted in a question-and-answer format, covers 22 areas which have drawn inquiries from NASD members. The new rules took effect Jan. 1 and limit how sales contests can be used to reward intermediaries for mutual fund and variable annuity sales.

EDGAR Online of Norwalk, Conn., in partnership with National Filing Service of New York, began offering a new service June 14 that will enable companies to file their Schedule 13D and 13G documents via the Internet. The SEC requires individuals or companies to file such documents once they acquire more than five percent of a company.

The Investment Company Institute has prevailed in its dispute with the Securities Industry Association over a proposed change in the law which prohibits transactions between a broker/dealer and its affiliated mutual funds.

Some mutual fund companies appear to be unfairly manipulating the investment performance figures they use in their advertisements, according to a top SEC official.

BOSTON - Harold Baxter and James D. McCall surely would have preferred to spend the Friday afternoon before Memorial Day weekend just about anywhere else. Baxter, CEO of Pilgrim Baxter & Associates of Wayne, Pa., and McCall, up until that day one of Pilgrim Baxter's star portfolio managers, spent roughly 90 minutes sitting within four feet of one another in a worn courtroom here on May 28 as they waited for their lawyers to emerge from closed-door meetings with a Massachusetts Superior Court judge. Judge Patrick J. King, who was scheduled to hear arguments on whether McCall should be released from an employment agreement he signed with Pilgrim Baxter, appeared to be engaged in an effort to broker a settlement in lawsuits between McCall and the firm.

ING Funds has filed with the SEC to create an Internet fund. The registration is expected to become effective in July.

Amicus Networks of Austin, Tex., and Vestment Consulting Services of Bloomington, Minn., have formed an alliance to help mutual funds and other financial service companies meet compliance requirements via the Internet.

WASHINGTON - The leading trade group for broker/dealers is hoping to reach an agreement with the Investment Company Institute on a proposal modifying the rules which prohibit transactions between a broker/dealer and a mutual fund.

A proxy advisory firm has been compelled to do a 180-degree turn on its recommendations to shareholders of the $166 million Emerging Markets Infrastructure Fund, managed by Credit Suisse Asset Management.

A recent federal court ruling gives plaintiffs' attorneys additional encouragement to bring suits against mutual fund companies.

Lawyers are scheduled to appear in a Boston court Friday to argue over whether James D. McCall, a portfolio manager at Pilgrim Baxter & Associates, should be allowed to leave the firm and join Merrill Lynch & Co.