Practice

The U.S. Attorney's office has filed criminal charges against three Mutuals.com executives, charging them with helping hedge funds deceive mutual fund companies by hiding their market-timing activities in separate accounts. Mutuals.com Chief Executive Officer Richard Sapio, President Eric McDonald and Chief Compliance Officer Michele Leftwich face up to five years in prison. This is the first time that federal, not state, regulators have filed criminal charges in the ongoing market-timing and late-trading investigation.

The SEC has formed a special committee to help determine whether 529 college savings plans offered through mutual fund companies and brokerage firms are overcharging investors.

Calpers, the nation's largest pension fund with $167 billion in assets, last week adopted a code of ethics for its outside money managers and consultants.

If advisers needed a go-go growth fund in the late 1990s, they probably turned to Janus Capital Group. Yet the aggressive strategy that Janus used to manage most of its funds ultimately backfired. After the tech bubble burst, the Janus name became a synonym for corporate management turmoil, manager exodus and vast fund outflows.

Will the growing number of settlements between disgraced fund companies and regulators put pressure on other fund advisors to slash fees, too? MFS, Putnam Investments, BoA and Alliance, the latter with a staggering 20% reduction over five years valued at a quarter of a billion dollars, have paved the way to what has become the industry's $64,000 question.

In his seminal book "The Right Stuff," Tom Wolfe wrote of those engineers and test pilots who believed in the 1940s that the sound barrier was a "brick wall" that would cause anyone who attempted to break it to "augur in" and "buy the farm." Chuck Yeager, of course, proved them to be wrong.

In rapid succession, several market-timing mutual fund cases have come and gone since Gary Pilgrim and Harold Baxter and the Wayne Pa.-based firm that bears their name, Pilgrim Baxter & Associates, were charged with fraud and skirting fiduciary responsibilities by regulators in mid-November, yet the case is still unresolved.

The National Association of Securities Dealers has slapped its first fine on a brokerage firm for violating NAV transfer program procedures.

WASHINGTON -- Flexing their muscles, Securities and Exchange Commission officials from around the nation told a group of lawyers here that while cooperation with regulators is essential, the bar has been raised in terms of penalties and no firm will avoid getting its medicine.

As legislators and regulators prepare to adopt more stringent regulation governing the mutual fund industry, some investment advisors will benefit from such rule changes while others will be harmed, according to Fitch Ratings.