Practice

Three former Invesco executives agreed to pay a combined $340,000 in fines to settle enforcement actions for their role in a market-timing scheme that allowed preferred clients to make excessive trades in exchange for sticky assets.

The long-awaited and much maligned deadline for mutual funds to disclose how they vote their proxies came and went last week as investors for the first time were given a peek at decisions on such matters as executive compensation and boardroom elections.

The Securities and Exchange Commission filed civil charges against broker/dealer National Clearing Corp. (NCC) and its parent company, JB Oxford Holdings (JBOH), for allowing customers to engage in late trading and improper market-timing activities. According to the SEC complaint filed in the U.S. District Court of Los Angeles, each of the defendants facilitated thousands of market-timing and late trades in more than 600 mutual funds between June 2002 and Sept. 2003.

Franklin Resources said in a regulatory filing that it may be in trouble from the state of California for revenue-sharing payments made to brokerage firms. California Attorney General Bill Lockyer told the company that enforcement action would be authorized, Franklin said. The news comes seven months after Lockyer announced a deep look into revenue sharing between mutual funds, including Franklin, and brokers.

It's time for fund companies to show their hands.

A former Canadian Imperial Bank of Commerce employee currently serving a two-year conditional sentence for committing a $20 million fraud involving mutual fund clients has been sentenced to one year in jail by a Canadian court.

In a new study, Financial Research Corp. predicts new SEC regulations will lead to a major shakeup for the mutual fund industry. FRC indicates that some mutual fund companies could pass on the costs of new regulations prompted by the far-reaching investment scandals by increasing shareholder expenses up to $125 per year.

Federal securities regulators churned out two more mutual fund reforms last week as directed-brokerage practices were officially junked and portfolio managers met with new standards for disclosure.

In the midst of the largest scandal in its 80-year history, and as a spate of new regulatory requirements gets underway, the mutual fund industry faces a major overhaul in the way it distributes funds.

WASHINGTON -- While the annuity industry remains hush-hush on the topic of the market-timing cases being brought by the Securities and Exchange Commission and the New York Attorney General, this silence does not indicate a lack of opinion. Speakers and attendees alike voiced their views on the brewing market-timing trouble and regulatory implications for the variable annuity industry here at the Regulatory Affairs Conference sponsored by the National Association for Variable Annuities of Reston, Va. And the consensus was that preventing market timing in annuities is more complex than preventing it in mutual funds.