The SEC obtained a court order yesterday freezing the assets of three Heartland Funds, placing the indeterminable assets, in the hands of a receiver with sole discretion over the holdings.

Independent auditors found an unqualified audit impossible given the illiquid nature of the nonrated securities at the heart of last year's drama. SEC requires an annual unqualified audit for compliance purposes.

The receiver, an attorney by the name of Philip L. Stern, can take any action deemed to be in the best interest of the shareholders. Shareholder redemption, however, was frozen yesterday with the assets. A Heartland spokesperson was unable to provide the number of shareholders affected.

"Heartland Advisors believes that the SEC's action will facilitate the fair and equitable disposition of the assets of the High Yield Funds," the firm stated in an official release, "although it recognizes that the freezing of the Funds' assets could pose an immediate inconvenience to High Yield Fund shareholders."

Assets for the High-Yield Municipal Bond fund, the Short Duration High-Yield fund, and the Taxable Short Duration Municipal fund are the funds under court order.  

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