Originally published in: Investment Management Developments - Summer 2001
Co-written by Timothy D Sperry
On April 30, 2001, the staff of the SEC’s Division of Investment Management sent a letter (the "2001 Letter") to the Investment Company Institute (the "ICI") relating to the "fair value pricing" of mutual fund securities. The 2001 Letter clarifies certain guidance previously provided by the staff in a December 8, 1999 letter to the ICI (the "1999 Letter"). It outlines the staff’s positions regarding: (1) the obligations of funds to determine the fair value of portfolio securities when market quotations are not readily available; (2) the ongoing responsibility of funds to assess the appropriateness of their portfolio security valuation methodologies; (3) the "good faith" standard that applies when determining the fair value of portfolio securities; (4) the valuation of foreign securities that are subject to exchange-imposed pricing limits; and (5) the inappropriateness of using
