SECURITIES

SEC Urges Clear Descriptions of Derivative Investments: A long-awaited Securities and Exchange Commission study of financial derivatives and mutual funds finds only limited problems but recommends new limits on the riskier derivatives and improved information about them. “Although the reported problems to date have affected a limited number of funds and fund types, they raise investor protection issues that merit serious consideration,” said the report. The study, requested earlier this year by two congressmen, recommends: a new way to measure the risks a fund takes in derivatives, reduction of the ceiling on hard-to-sell or “illiquid” securities that a fund can hold, and examination of whether restrictions on leverage in the Investment Company Act of 1940 still apply given modern use of derivatives.