Practice

What a difference a year makes.

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.