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.

The performance of 78 percent of the approximately 500 existing closed-end funds will most likely soon be published daily, providing a boost to the popularity of the product.

The fight between Donald Yacktman and the independent directors of his funds is likely to continue this month, propelled in part by intervention from the Securities and Exchange Commission.

Representatives of the mutual fund industry are moving quietly in Massachusetts to enact a law which would help define what makes a mutual fund director independent, an increasingly contentious issue.

The practice of paying brokers fees to reward them for maintaining assets under management for as long as possible may be resurfacing even as regulators weigh whether the practice warrants increased oversight.

The National Association of Securities Dealers has amended its by-laws to require the executive representatives of each member organization to maintain e-mail accounts for communications with NASD. The new requirement becomes effective Jan. 1, 1999.

The Financial Accounting Standards Board (FASB), the self-regulatory body governing the accounting industry, has adopted a change in the accounting method closed-end fund advisers must use that will reduce these companies' profits. The rules apply to funds that lack 12b-1 or contingent deferred sales charges (fees paid when a shareholder redeems his shares). These include closed-end and privately-placed funds.

Donald Yacktman and his money management firm have won an early round in their court fight with the independent directors of the Yacktman funds.