Alternative investments

China's mutual fund sector posted record paper losses for the first half of the year, totaling $158 billion, or 1.08 trillion yuan, yet management fees more than doubled from a year ago, according to Shanghai Securities News.Equity mutual funds posted a combined unrealized loss of $155 billion, while money market funds showed a paper profit of $190 million.The huge drop comes at the end of a two-year bull run that raised share prices six-fold. The mutual fund sector grew nearly seven-fold to more than $439 billion, or 3 trillion yuan.

England's Financial Services Authority has found no evidence of a "concerted attempt by individuals" to alter share prices in Halifax Bank of Scotland (HBOS) during the raid of its shares earlier this year, according to the Mondaq Business Briefing.HBOS' shares fell by 17% in 20 minutes on March 19 after someone spread false rumors that the bank had asked the Bank of England for an emergency loan. The panic came just days after the collapse of Bear Stearns in the U.S.Many officials suspect that hedge funds may have played a large role both incidents, though regulators have not been able to pin the blame on anyone yet.After four months of investigating, the FSA found no evidence of abuse. The agency stated that it would continue to watch for rumor-mongering "at a high level of intensity," and will take action if any evidence is found.The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.

The chairman of Credit Suisse Group's alternative investments business said that his unit plans an international expansion for the recently acquired Asset Management Finance Corp., using joint ventures to enter new regions and sectors.Chairman Brian Finn said that by early next year Credit Suisse needs to put some Asset Management Finance executives internationally in cities like London or Zurich and eventually in Asia, possibly in Singapore or Hong Kong.He discussed the plans in an interview last week, after the Zurich firm bought 80% of the New York investment manager from National Bank Financial of Canada for $384 million of stock.Finn said that he hopes to have some international customers for Asset Management Finance by late next year."We think that there is a big global opportunity," Finn said. "We have developed a lot of joint ventures in Latin America, China, and the Middle East, but as a general matter as we look at investment managers in the U.S., we think the next few deals will be in more-developed markets."

The Financial Industry Regulatory Authority (FINRA) has widened its ongoing auction rate securities (ARS) probe with a sweep letter aimed primarily at sellers, rather than lead managers, of the illiquid instruments.The six-page letter, sent last week to 40 broker-dealers, contains a laundry list of requests covering the period from June 1, 2007 through June 30, 2008. Firms must produce all documents, electronic or otherwise, indicating any arrangement with other parties, including ARS issuers and auction agents, to sell, remarket or solicit bids for the securities.“It appears that FINRA is interested in doing a thorough investigation, given the depth and breadth of the request,” said Brian Rubin, Washington, D.C.-based partner in law firm Sutherland Asbill & Brennan and former deputy chief counsel of enforcement at FINRA predecessor NASD.State regulators and the Securities and Exchange Commission have thus far pursued charges against firms -- including Citigroup, UBS Financial Services, Merrill Lynch & Co., Goldman Sachs Group and Deutsche Bank -- that have been lead underwriters as well as sellers of the securities.“Now, it appears that FINRA is looking at selling firms,” Rubin said.FINRA spokesperson Herb Perone would not comment on the letter except to say how many firms received it.Allegations against lead managers have focused on internal communications detailing problems with the auction rate securities market that were not disclosed when the products were sold.With the new sweep letter, according to Rubin, FINRA appears to be investigating whether the selling brokers obtained information from the lead managers that they failed to disclose to clients. The self-regulatory organization is also looking at basic sales practices including whether the securities were suitable investments, misrepresentations were made and advertising was fair and balanced.

The Securities and Exchange Commission has opened a 60-day public comment period to see whether the U.S. should adopt international reporting standards.

When 12b-1 fees were established in 1980 as a way to help mutual funds gain investors, the industry was far smaller than it is today.

While hybrid mutual fund and annuity product solutions began gaining advisers’ and investors’ attention last year, such managed payout funds still have flaws. That’s according to a report from MarketWatch.

Credit Suisse Group announced it was acquiring a majority interest in Asset Management Finance Corp. of New York from National Bank Financial of Canada.

Baby Boomers and their financial advisers are going to increasingly look for one-stop-shop solutions that combine mutual funds, annuities and systematic or laddered drawn-down schedules, Investment News reports.

The unbridled growth of exchange-traded fund assets and products appears to have hit a speed bump, at least for now, The Wall Street Journal reports.

CLSA Capital Partners has created a new fund that invests in Asian water and waste management opportunities, Reuters reports.

The Securities and Exchange Commission suffered a setback last week in its efforts to prosecute individuals for insider trading after a judge dismissed the charges on a case from 2001.

The chairman of South Korea's Financial Services Commission, Jun Kwang-woo, spoke out Monday about last week's reports that state-controlled Korea Development Bank was possibly interested in buying Lehman Brothers.

Catherine J. Weatherford has been named president and chief executive officer of NAVA, the Association for Insured Retirement Solutions, based in Reston, Va.

To the North American Securities Administrators Association (NASAA), there are plenty of modern-day Willie Suttons eager to go "where the money is."Today, the money is largely held by seniors. Hence, regulators say, seniors are the targets of unscrupulous salespeople armed not with pistols, but with professional designations that exaggerate their competence or their concern for seniors' well-being.Now some of these individuals are being sought out not by potential clients, but by federal regulators, including the SEC and FINRA. These regulators are making it clear that advisors who use the word "senior" or various synonyms to transact business unethically are squarely in their sights. These individuals are "among [regulators'] top targets," says Tracy DeWald, general counsel at Securities America, a broker-dealer based in Omaha, Neb. "People age 60 and over are the biggest source of regulatory complaints."According to NASAA, some product salespeople using "senior" designations typically invite senior citizens to seminars where a free lunch is served along with a presentation on investments. Either at the seminar or through follow-up contacts, some advisors ultimately sell unsuitable investments to some of the attendees.In April, NASAA introduced a model rule on the use of senior- specific certifications and professional designations. This rule, which prohibits the misleading use of designations that include words like "senior" and "retiree," has already been adopted by the state of Washington. At press time, New Hampshire was set to adopt the rule and other states are likely to follow suit. A report issued last year by NASAA, FINRA and the SEC lists the popular Certified Senior Advisor (CSA) designation among those it considers misleading or confusing.Some broker-dealers have effectively banned reps from publishing senior-related credentials. Genworth Financial, for example, prohibits its employees and agents from using the CSA designation (the most common senior designation) on their business cards or in their marketing materials."We have a similar policy," says DeWald of Securities America. "In fact, we have lists of which designations are acceptable in published materials and which aren't. None of the 'senior' or 'elder' designations are on the accepted list. Some of our reps have these designations, which they can mention to clients in conversation. They can't put the letters behind their names to promote themselves."The CSA designation is conferred by the Society of Certified Senior Advisors (SCSA), which bills itself as the world's largest membership organization for professionals seeking to improve their skills in working with seniors. More than 9,500 advisors now hold a CSA designation.SCSA executives are quick to defend their organization."We're aware of regulators' concerns that certain professional designations may be misperceived by the public," compliance specialist Bill Kaluza says. "That's why SCSA requires each CSA to provide a written disclaimer to clients and potential clients."Are the CSAs telling the disclaimer to potential customers?"To date, we've had very little indication that CSAs are not using the statement," Kaluza said.

Rather than acquire or invest only in companies seen as turnarounds, private equity firms are increasingly attracted to the strength and high-net-worth retail customer base of asset management firms, a category they traditionally have sidestepped, Dow Jones reports.As Miguel Sagarna, a partner in the private equity group at KPMG, put it, “It’s a very scalable business, and it is a good quality product, it can grow fast with good margins.”And with so many banks and asset management firms looking to raise capital by selectively selling off divisions, private equity firms are seeing this as a great opportunity to take advantage of good prices. Some are even planning to build broad financial services operations, said William Kirsch, chairman of the private equity group at Paul Hastings.Certainly, private equity firms are looking to diversify their holdings, Sagarna agreed.However, since most private equity firms closely guard their business, it is likely they will run any asset management firms they acquire alongside their business, experts said. That does not mean that they may not still share information and research, Kirsch said.Asset management firms might even help private equity shops develop new products, added Adam Schneider, a principal at Deloitte.

West Virginia and Nebraska offer the best 529 college savings plans, according to a ranking by SavingforCollege.com, a unit of Bankrate Inc., set to be released Friday.

Investors are interested in going green with their portfolio, but advisers are failing to even suggest investing in it, according to a Roper Center poll.

WASHINGTON - Fidelity Investments and Charles Schwab & Co. are suggesting state and federal securities regulators focus their auction-rate securities investigations on the major banks and broker-dealers that underwrote ARS rather than smaller brokerages that had no advance knowledge that the ARS market was going to collapse.

The Securities and Exchange Commission has unveiled its latest plan to make financial information far more accessible and easy to use.