Washington (Dec. 5, 2003) -- Amid a widening scandal that has rocked the mutual fund industry, the Securities and Exchange Commission proposed tougher rules this week aimed at curbing abuses among funds.
The commission voted to adopt a compliance rule that will require funds and advisors to have compliance policies and procedures, to annually review them and to designate a chief compliance officer who must report to the board of directors. Compliance with the rule will be required within nine months of its publication.
The Commission proposed two additional rules aimed at curbing abuses. One proposed rule, aimed at ending late trading, would require that orders to purchase or redeem fund shares be received by the fund, its primary transfer agent or a registered securities clearing agency by the time that the fund establishes for calculating its net asset value in order to receive that day's price (typically 4:00 p.m. for most funds).
A second proposal aimed at enhancing disclosure requirements, would require funds to disclose market timing policies and procedures, practices regarding "fair valuation" of their portfolio securities, and policies and procedures with respect to the disclosure of their portfolio holdings. Both proposals will be up for public comment for 45 days following publication in the Federal Register.
-- WebCPA staff
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