Practice

Warren Buffet, in his widely anticipated annual to his Berkshire Hathaway shareholders, blasts fund companies that cheated millions of investors through market timing and late trading, as well as directors who fell short of their duties. Funds are in dire need of "truly independent directors" willing to fire investment managers who overcharge on fees or fail to put shareholder interests first, Buffet said in his report. CEOs of fund companies are grossly overpaid, he added, holding directors, themselves richly paid, to blame. Buffet also referred to the sale of Strong Funds, without naming the firm, as "a travesty." The real "acid test" of whether current investigations into Wall Street will lead to meaningful change, Buffet said, is whether firms are willing to bring the pay scales of their chief executive officers back down in line with reality.

MFS Investment Management has hired a new chief counsel and a compliance officer to oversee corporate governance and compliance procedures in the wake of its $350 million settlement with regulators last month.

NEW YORK -- Soft dollars and directed brokerage are appalling and must be eliminated. That's the tune we've been hearing almost uninterrupted for the last several months as regulators and lawmakers have unleashed the hounds on the fund industry. But not all are on board with the efforts to kill the practices.

Bank of America, the nation's third-largest bank, was slapped with a record $10 million fine last week for failing to comply with regulators' repeated requests for information during their probe of improper trading practices.

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

Putnam Investments took the initial hit from the rash of sales and marketing executives defecting to Liberty Financial in the late 1990s, but it is Columbia, which since consumed Liberty, that is now poised to take a beating from the transaction.

The House Financial Services Committee passed The Securities Fraud Deterrence and Investor Restitution Act (H.R. 2179), which would permit the SEC to more easily collect fines and funds from those who have broken the law. It would also increase the amount of funds the SEC would be able to return to injured investors.

MIAMI -- With Baby Boomers turning age 50 at a rate of 12,000 a day, meeting the needs of mutual fund investors has forced investment advisors to redefine retirement. That's one person every eight seconds for those scoring at home.

The number of mutual funds lowering fund-management fees is proliferating, and as the mutual fund scandal continues to unfold, this trend should spread, according to industry analysts.

Regulators are not just targeting those in cahoots with market timers. Now, any firm that failed to do enough to keep the wolves out of the pen is fair game.