Green light for electronic signatures in US

US fund managers have taken advantage of laws allowing them to sell funds over the Internet using electronic signatures.

US fund managers have taken advantage of laws allowing them to sell funds over the Internet using electronic signatures.

In the week since the Electronic Signature in Global and National Commerce Act took effect, Fidelity, Vanguard and American Century have offered investors the service which allows them to open accounts with fund managers without putting pen to paper.

Australian investors have been able to sign up for funds electronically for most of this year, fol-lowing a ruling by the Australian Securities and Investment Commission (ASIC) in February. However, fund managers have been slow to take it up, fearing the regulations lack the bite of legislation.

US managers faced a similar predicament until October 1. Prior to then, only a handful of smaller fund companies offered e-signature capabilities.

Under the new initiatives, Vanguard will only allow existing fund shareholders to open a Van-guard brokerage account using an e-signature. Prospective clients - without an existing Vanguard relationship - won't be able to open fund or brokerage accounts this way until late this year or early next.

Fidelity will allow prospective investors to open brokerage accounts online by the end of Octo-ber. Those customers, in turn, will be able to buy fund shares, but the company has no plans now to let investors directly establish fund accounts using e-signatures. American Century is allowing prospective investors to open fund accounts immediately.