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SEC Meeting Developments

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  • Baker, John
    The Securities and Exchange Commission at its meeting on Tuesday, April 30, approved most of the rule proposals and rule amendments on its agenda, including
    Message 1 of 1 , May 6 7:05 PM
      The Securities and Exchange Commission at its meeting on Tuesday, April 30, approved most of the rule proposals and rule amendments on its agenda, including proposing changes to the restrictions on transactions between investment companies and some of their affiliates. The SEC has also scheduled another open meeting for Wednesday, May 8, at which time the SEC will consider the pending high-profile proposals on research analyst conflicts of interest.

      The proposed amendments to the affiliated transaction rules generally would expand the existing exemptions for transactions between funds and their portfolio affiliates (i.e., companies that are affiliated with a fund solely because the fund, or other funds in the same complex, owns more than 5% of the company's voting securities). The proposals would also permit funds to engage in various transactions involving subadvisers of affiliated funds, which should reduce the number of exemptive orders issued by the SEC in this area. Comments on the proposals are due by July 19, 2002. Release No. IC-25557 (Apr. 30, 2002). The SEC proposing release is available online at


      The SEC also amended Rule 10f-3 under the Investment Company Act of 1940 to expand the exemption provided by the rule to permit a fund to purchase securities offered by a government-sponsored enterprise, such as the Federal National Mortgage Association (Fannie Mae), when the fund has certain affiliations with an underwriting participant. The amendment takes effect May 10, 2002. Release No. IC-25560 (Apr. 30, 2002). The adopting release is available online at


      The SEC also took several other actions at the Tuesday meeting, notably including a proposal to require disclosure of critical accounting policies in the Management's Discussion and Analysis (MD&A). The SEC previously discussed its intention to propose this requirement in a December cautionary advice, in which it also recommended that issuers make these disclosures voluntarily. Release Nos. 33-8040, 34-45149, FR-60
      (Dec. 12, 2001). The SEC release proposing the MD&A amendments is not yet available, but an SEC press release summarizing the actions taken at the Tuesday meeting is available online at


      The SEC has announced that at its next meeting, on Wednesday, May 8, at 9:30 am, it will consider whether to approve proposed rule changes submitted by the New York Stock Exchange and the National Association of Securities Dealers relating to research analyst conflicts of interest and whether to issue an order extending the temporary exemption of banks, savings associations, and savings banks from the definitions of "broker" and "dealer" in the Securities Exchange Act of 1934. The SEC apparently intends to continue its new practice of webcasting audio from its open meetings, and these can be accessed both live and archived, in both Windows Media Player and RealPlayer formats, at


      John M. Baker <JMB@...>
      Stradley, Ronon, Stevens & Young, LLP Http://www.stradley.com
      1220 19th Street, N.W., Suite 700, Washington, DC 20036
      (202) 419-8413 Fax (202) 822-0140
      FundLaw Listowner Http://groups.yahoo.com/group/fundlaw
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