Practice

Roy Weitz, publisher of fundalarm.com, and Jack Bogle, founder, Vanguard Group, faced off last May on some of the problems the two outspoken critics have found rife in the industry (see inaugural issue of Money Management Executive 5/19/03).

The mutual fund scandal took a surprising turn last week when Alliance Capital Management agreed to lower management fees on its funds as part of a landmark $600 million settlement that could set an alarming precedent.

The scandal of 2003 is such a pivotal event since the advent of the mutual fund industry in 1940 that there are two salient facts about it that will undoubtedly be remembered in years to come. Its magnitude and its stealth.

It's your worst nightmare come true. Regulators called yesterday to inform of their investigations into your firm's practices, and already some of the toughest news reporters in the industry have called for comments --some more than once. You are still trying to absorb the information, figure out what's what and find out who did what, when, and why?

To restore industry confidence and nudge investors' interests back to the forefront, the Investment Company Institute told the SEC last Monday it supports the curtailing of soft dollars and banning of "directed brokerage." Commenting on the proposal, ICI Chairman Paul G. Haaga, Jr. said the proposed changes would "benefit fund investors by substantially diminishing potential conflicts of interest and strengthening the operating integrity of mutual funds."

(Reprint from 12/9/02 MFMN)

If we were to stage a "Best of" show about the year's impact on job prospects, Eliot Spitzer would be a good choice to serve as our affable host. And you, as a compliance professional, would no doubt have a chance to walk up to the stage, collect your trophy, and give the New York Attorney General your personal thanks for improving your job prospects tenfold.

Not all scandals are created equal. As such, Invesco Funds is apparently digging in its heels and preparing for a dogfight with regulators, a stark contrast to the "yes siring" going on at firms accused of more outrageous activities.

Noreen Harrington, a former executive of the Stern Asset Management arm of the Hartz Group, identified herself as the initial whistleblower in the mutual fund scandal that has ravaged the industry, according to reports.

There are many laws that hold parents responsible for the willful misconduct of their children, and now it looks like Marsh & McLennan Cos. (MMC) may have to face the music for its lack of oversight of its Putnam Investments unit.