June 30, 1994
TO: BOARD OF GOVERNORS NO. 56-94
ACCOUNTING/TREASURERS COMMITTEE NO. 35-94
DIRECT MARKETING COMMITTEE NO. 15-94
INDUSTRY STATISTICS COMMITTEE NO. 11-94
MARKETING POLICY COMMITTEE NO. 26-94
MEMBERS - ONE PER COMPLEX NO. 41-94
OPERATIONS COMMITTEE NO. 13-94
PUBLIC INFORMATION COMMITTEE NO. 22-94
SALES FORCE MARKETING COMMITTEE NO. 22-94
SEC RULES COMMITTEE NO. 70-94
SHAREHOLDER COMMUNICATIONS COMMITTEE NO. 15-94
RE: ICI AND SEC CORRESPONDENCE REGARDING PRESS COVERAGE OF FUND
PRICE REPORTING
__________________________________________________________
As you are no doubt aware, some of the recent press coverage
of certain fund price reporting problems have either omitted or
failed to emphasize important facts about fund pricing and price
reporting.
The Institute submitted the attached letter to SEC Chairman
Arthur Levitt to note that: (1) while prices were incorrectly
reported, share transactions were processed at the correct prices;
(2) the pricing process is rigorous and demanding and involves the
application of extensive control procedures; and (3) the pressure
on the fund industry to meet the daily 5:30 pm reporting deadline
arises from demands of news organizations to be supplied with fund
price information.
The letter also notes that the Institute and other interested
parties have been engaged in meetings with the NASD and the wire
services to explore ways to alleviate some of the time pressure
associated with the current price reporting process.
The attached briefing paper on fund pricing and price
reporting was included with the letter to Chairman Levitt.
Simultaneous with our letter and briefing paper, the Institute
received a letter from Chairman Levitt on this matter. A copy is
included. Chairman Levitt's letter, which was also addressed to
the NASD, states that the recent press reports have raised
"questions about the ability of mutual funds to report timely and
accurate prices" to the NASD. Chairman Levitt's letter
acknowledges that the Institute and the NASD are working together
to develop procedures to eliminate price reporting problems and
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urges that work on this project continue. The letter requests a
report on this project within two weeks as well as an assessment of
existing pricing problems in the mutual fund industry.
We will keep you informed of further developments.
Matthew P. Fink
President
Attachment