Practice

With so many surveys reiterating Americans' lack of preparedness for retirement, it's certainly good news that assets in 401(k) plans are finally growing again. However, that's primarily because the stock market performed so well in 2003, not because employers or investors are committing more money.

In its initial probe of four top Canadian mutual fund firms, the Ontario Securities Commission announced that market timing did not take place. The OSC also investigated CI Mutual Funds, AIC Ltd., AGF Fund Management and Investors Group for late trading and found no instance of that, either.

J.P. Morgan Chase and Lehman Brothers Holdings have been charged in a class-action lawsuit for helping hedge fund Canary Capital Partners engage in trading violations that harmed long-term shareholders. Until the lawsuit, both J.P. Morgan and Lehman had managed to stay above the far-reaching mutual fund scandal that has tainted more than a dozen financial service firms with accusations of improper trading activities. The lawsuit was filed in federal court in Baltimore.

SAN ANTONIO -- The Investment Company Institute held its annual Tax & Accounting conference in 2003, just nine days after the scandal broke last year amid a cloud of controversy and confusion and long before the full scope of Fundgate would be realized by the industry.

The Securities and Exchange Commission has charged RS Investment Management, CEO Randall Hecht and Steven Cohen, former chief financial officer, with allowing certain mutual fund investors to market time the firm's funds. These investors profited from the trades, potentially at the expense of other shareholders, and RSIM was able to earn "substantial advisory fees."

In a year filled with securities industry scandals and settlements, the Securities and Exchange Commission has uncovered a new source of potential conflicts of interest. It could be yet another reason to expand the already overwhelming number of disclosures required of investment advisors and broker/dealers.

Having watched a number of mutual fund companies mishandle inquiries from securities regulators for the past 12 months, fund-tracking firm Morningstar knew what to do when faced with its own brush with the law.

A new bill banning the sale of a certain type of mutual fund on military bases drew unanimous support from a House panel Wednesday, as lawmakers look to protect young American troops from shady sales practices and ill-suited investment products.

The National Association of Securities Dealers has widened its inquiry into sales of 529 plans by investment advisors and brokers, more than tripling the number of firms under scrutiny to 20. The regulator began its fact-finding investigation in June of 2003 with an analysis of six large broker/dealers.

As significant federal regulation passed earlier this year begins to take effect, industry professionals are seeking greater guidance from the Securities and Exchange Commission on specific reporting mandates and examining the benefits of implementing optional requirements.