A New York federal court judge has dismissed the second of five cases which challenge the independence of mutual fund directors based on their allegedly high pay.

Lawyers have become clear beneficiaries of fights over the performance of closed-end funds and it is the shareholders of closed-end funds who are primarily paying for the lawyers' good fortunes.

A federal court judge has dismissed a lawsuit against T. Rowe Price Associates, giving support to mutual fund industry executives' contentions that fund directors do not lose their independence by serving on more than one mutual fund board.

Worth Bruntjen, a former portfolio manager for the asset management unit of the Piper Jaffray Cos., last week agreed to pay $100,000 to settle SEC charges that he misled investors about his derivative investments from 1992 through at least April, 1994.

The most important issue addressed in this year's SEC letter to CFO's is the requirement that funds include in their reporting of revenue, payments, in cash or kind, they receive from broker/dealers for sending them business. The letter also reminded CFOs of the requirement that funds update their performance bar chart information to reflect the most recent quarterly or year-end performance, said Kenneth Domingues, chief accountant of the SEC's Division of Investment Management.

The SEC has fined three independent fund directors for their alleged conduct in supervising a money market fund whose net asset value (NAV) dropped below $1.00 per share in 1994.

A US Supreme Court action last week is expected to contribute to an increase in the number of patents financial services firms seek.

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.