Practice

Investors have filed a class-action suit against Salomon Smith Barney for allegedly breaching its fiduciary duty between March 22, 1999 and March 22, 2004 by claiming its financial advisers were selling mutual funds objectively when, in fact, they were steering them into the firm's "inferior" proprietary family of more than 220 funds.

NEW YORK -- At a recent news conference held here, Calvert, a socially responsible investment management firm headquartered in Bethesda, Md., unveiled new corporate guidelines it created for the proper ethical and moral treatment of women workers. The news event was co-sponsored by Calvert and the United Nations Development Fund for Women (UNIFEM), which provides financial and technical support for the enhancement of women's rights.

Playing favorites and making quid pro quo deals have been longstanding practices in the financial services industry, and the 401(k) marketplace is not immune to its ill effects. As such, federal regulators have joined their state counterparts in examining the opaque nature of 401(k) fees and related revenue-sharing arrangements.

The NASD has fined five brokerage firms $625,000 for failure to have the supervisory systems in place to detect and prevent late trading. The five are D.A. Davidson & Co., T.D. Waterhouse Investor Services, Stifel Nicolaus & Co., National Planning Corp. and SII Investments, Inc. Each of these firms processed trades after the 4 p.m. close of the market, the NASD said.

Bank One Corp.'s mutual fund arm on Tuesday agreed to a $90 million settlement with New York state and federal regulators for allowing hedge funds to engage in abusive round-trip trading of its fund shares, a racket that depleted the returns of long-term shareholders.

In a new era for independent directors, Dawn-Marie Driscoll, already a busy woman, is likely to be even more in demand. She is president of Driscoll Associates, a Cape Coral, Fla.-based business ethics consulting firm, and executive fellow and advisory board member at the Center for Business Ethics at Bentley College in Waltham, Mass. In addition, she serves as an independent trustee and board chairman for the mutual funds at Scudder Investments and serves on the board of governors of the Investment Company Institute. She has also been a member of the ICI directors' services committee since its 1995 formation and served as its chairman from 1998 to 2002.

CHICAGO--During a star-studded Morningstar investment conference panel, investor advocate Mercer Bullard called for a complete overhaul of the way fund companies conduct business, while Bob Pozen and Ed Haldeman warned of the unintended consequences of overzealous regulation.

There was no place of refuge for tainted mutual fund shop Pilgrim Baxter & Associates, as the company last Monday agreed to a $100 million settlement with regulators for engaging in abusive trading practices.

Some states are unfairly discriminating against investors choosing to invest in 529 college savings plans outside of the state in which they reside, creating mounting problems for the industry, according to a recent white paper by the College Savings Foundation (CSF).

For mutual funds, it was the shot heard round the world.