Client Alert

SEC Settles Mutual Fund Pricing Charges Against Independent Directors

January 06, 2004

Investment Management Practice Group

On December 11, 2003, the Securities and Exchange Commission announced that it had settled charges brought against four independent directors of Heartland Group, Inc., a registered open-end management investment company. The charges stemmed from allegations that the directors were negligent in discharging their responsibility to oversee the valuation of bonds held by two series of Heartland, the High Yield Municipal Bond Fund and the Short Duration High-Yield Municipal Fund. The SEC’s action could signal a new enforcement focus on fund directors in the area of fair valuation practices, particularly market timing and late trading abuses.

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