January 29, 1990
TO: SEC RULES MEMBERS NO. 7-90
UNIT INVESTMENT TRUST MEMBERS NO. 8-90
RE: SEC FILES COMPLAINT AGAINST A MUTUAL FUND AND AFFILIATED
PARTIES
__________________________________________________________
The Securities and Exchange Commission filed a complaint in
the United District Court for the Northern District of Illinois
against a mutual fund, its adviser, its underwriter and the
president of the adviser and underwriter alleging violations of
Sections 17(a)(2) and (3) of the Securities Act of 1933 and
Sections 22(c), 34(b), 31(a), 17(f) and 30(a), (b) and (d) of the
Investment Company Act of 1940.
As stated in the attached release, the Commission alleged
in its complaint that the fund, with the assistance of the other
defendants, sold and redeemed shares of the fund at prices which
were not based on the calculated net asset value of those shares.
The complaint also charges that defendants falsely stated in
documents filed with the Commission that the prices of the shares
were based on their calculated net asset value. Moreover, the
complaint states that some or all of the defendants failed to
keep current certain required books and records, failed to follow
required procedures for maintaining the fund's assets and failed
to file certain required reports with the Commission.
As we previously informed you, in November the Commission
suspended redemption of the fund's shares. (See Memorandum to
SEC Rules Members No. 67-90 and Unit Investment Trust Members No.
66-90, dated December 8, 1990.) That order expired on December
15, 1989.
We will keep you informed of further developments.
Amy B. Rosenblum
Assistant General Counsel
Attachment