By: Kenneth S. Gerstein and David Efron
This article was originally published in the SR&Z Spring 2000 issue of Investment Management Developments.
On December 8, 1999, the staff of the SEC’s Division of Investment Management issued a letter to the Investment Company Institute ("ICI") addressing certain issues relating to the "fair value pricing" of mutual fund portfolio securities (the "ICI Letter"). The letter was prompted by recent events during which open-end, management investment companies ("mutual funds") were unable to obtain current market quotations to value their investments due to emergency and unusual situations. The staff issued the ICI Letter: (1) to clarify the circumstances under which exchange closures or market disruptions require that portfolio securities be priced at fair value; (2) to provide guidance as to the factors that should be considered in determining the fair value of portfolio securities; and (3) to outline the responsibilities of fund boards of
