The June 2002 issue of Fund Democracy Insights discusses regulatory
issues that are likely to occupy the SEC in the near term, and proposes a
model for mutual fund regulatory reform.
Table of Contents
Links to resource materials (.pdf files require Adobe Acrobat
for viewing):
The Mutual Fund Regulatory Agenda
- Disclosure
- Paul
F. Roye, Maintaining Investor Trust In A Competitive Variable Products
Marketplace, Remarks at the National Association of Variable Annuities
2001 Regulatory Affairs Conference, Part VI.A (June 25, 2001) (suggesting
possible changes to portfolio disclosure rules)
- Letter
from Craig S. Tyle, General Counsel, Investment Company Institute, to
Paul F. Roye, Director, Division of Investment Management, SEC (May
1, 2002) (transmittal letter and package of proposals) (recommending,
among other things, reform of section 13(f) reporting requirements)
- Harvey
L. Pitt, Remarks before the Investment Company Institute, 2002 General
Membership Meeting (May 24, 2002) (discussing SEC consideration of disclosure
requiring additional disclosure of fund proxy voting records and policies)
- Links
to AFL-CIO and Teamsters petitions asking SEC to require fund disclosure
of proxy voting records and policies
- Walter
B. Hewlett, et. al v. Hewlett-Packard Company, C.A. No. 19513-NC (Del.
Ct. Chancery Apr. 30, 2002)(questioning ethical propriety of Deutsche
Asset Management vote switch)
- Rule 12b-1
Amendments
- Report
on Mutual Fund Fees and Expenses, Division of Investment Management,
SEC (Dec. 2000) (discussing, at Part IV.B, recommendations regarding
rule 12b-1)
- Harvey
L. Pitt, supra (discussing SEC's plans to review rule 12b-1)
- Laurie
Kulikowski, SEC Plans to Examine 12b-1 Rule, Financial Planning Interactive
(May 29, 2002) (suggesting that the SEC may require greater public disclosure
to investors of indirect methods of financing distribution)
- Panel:
Fund Distribution Arrangements, Roundtable on the Role of Independent
Investment Company Directors (Feb. 23, 1999) (discussing mismatch of
factors that regulations suggest directors should consider when evaluating
12b-1 plans, and the actual use of the plans)
- Affiliated
Transactions
- Transactions
of Investment Companies with Portfolio and Subadvisory Affiliates, Investment
Company Act Release No. 25557 (Apr. 30, 2002) (proposing amendments
to expand existing exemptions for transactions between funds and their
portfolio affiliates, and to exempt transactions where the affiliation
exists solely by reason of a subadvisory relationship and the relevant
transaction does not involve the part of the fund that is managed by
the subadviser; and reproposing amendments to extend 25% limit on purchases
in an underwriting to all accounts managed by the affiliate)
- Exemption
for the Acquisition of Securities During the Existence of an Underwriting
or a Selling Syndicate, Investment Company Act Release No. 25560 (Apr.
30, 2002)(extending exemption to government securities)
- Investment
Company Mergers, Investment Company Act Release No. 25259 (Nov. 8, 2001)(proposing
amendments to rule 17a-8)
- Link
to SEC Open Meeting (Apr. 30, 2002) (at which Chairman Pitt criticized
staff proposal that fund directors be required to consider certain factors
when evaluating fund mergers under rule 17a-8)
- David
Silver, The Investment Company Act of 1940: At The Frontiers 20 (Nov.
2001)(discussing pressure from industry for extensive relief from affiliated
transaction prohibitions)(.pdf file))
- Paul
F. Roye, Maintaining the Pillars of Protection in the New Millennium,
Remarks at the Investment Company Institute General Membership Meeting
(May 21, 1999)(rebuffing arguments that affiliated transaction prohibitions
should be substantially amended)
- Shareholder
Voting
- Baker
Calls Spitzer’s Rules "Illegitimate, Unenforceable, and a Cause for
Confusion,” Press Release, Office of U.S. Rep. Richard Baker (May 23, 2002)
(arguing that Spitzer’s negotiated settlement with Merrill Lynch exceeds
proper scope of his authority)
Worth Reading on the Internet
Barclays
Global Fund Advisors, Investment Company Act Release No. 25594 (May 29, 2002)
(notice of exemptive application to permit fixed income exchange-traded fund)
William
J. Bernstein, Efficiency, Rationality and Arbitrage, The Efficient Frontier
(Spring 2002) (critiquing argument that mutual fund nonperformance proves
efficient markets theory on ground that mutual fund cash flows move against
positive performance, thereby systemically suppressing fund returns)
Paul
F. Roye, Remarks before the Glasser LegalWorks' Investment Management Regulation
Conference (June 6, 2002) (discussing matters currently pending or being considered
by Division of Investment Management)
Letter
from Matthew A. Chambers, Wilmer, Cutler & Pickering, to Jonathan G. Katz,
Secretary, SEC (May 23, 2002) (petitioning SEC to adopt a rule codifying the
ICOS test of whether a company is an investment company, with exception that
ICOS prohibition on strategic investments and limits on investment income
relative to R&D expenses would be modified)
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