Money Management Executive Latest News

In an effort to offer a low-volatile option for defined benefit plans, Vanguard will launch an Extended Duration Treasury Index Fund, tied to the Lehman Brothers Treasury STRIPS 20-25 Year Equal Pay Bond Index.

David van Duyn, a former lawyer at Fidelity Investments’ risk oversight and enterprise compliance unit, has sued the company, charging it failed to comply with anti-money laundering laws, Reuters reports.

John Hancock has settled with the Securities and Exchange Commission on charges that it failed to disclose revenue-sharing agreements. The firm, which neither admitted nor denied the allegations, is paying $21.2 million.

Score one for the mutual fund industry.

Milton Shaffner, 92, is tired to prying bulky mutual fund publications out of his mailbox, and is lobbying the industry and regulators to cut back on paper, the South Florida Sun- Sentinel reports. “I don’t think anyone sits down and reads a 242-page report on his funds,” the retired lawyer said. So he wants fund companies to stop clogging his mailbox and spending shareholders’ money to produce and mail them. The Pompano Beach man also questions why he gets book of information dedicated mainly to funds he does not own, rather than only the pages relevant to his holdings. Of course, Shaffner’s contention that investors don’t read these lengthy disclosures—seven of 10 never looks at them when choosing funds—dovetails with Securities and Exchange Commission Chairman Christopher Cox’s initiative to move mutual fund shareholder communication online. It also complements the Investment Company Institute’s push to streamline paper disclosures. Shaffer has written on several occasions to the SEC, to his fund company, and to the local paper. He applauds these streamlining efforts. And although he probably won’t go online to get information himself, he’s happy if it will keep paperwork out of his mailbox. “Maybe if they save $5 million in unnecessary expenses, they’ll increase the dividend instead of cutting it,” Shaffner said.

A proposed change in the tax code could slim some hedge fund managers’ paychecks, according to the International Herald Tribune. Senate Finance Committee Chairman Max Baucus (D-Mont.) and member Charles Grassley (R-Ia.) introduced a bill last week to increase taxes on private equity firms that go public. There is speculation that in upcoming weeks, a similar bill aimed at hedge funds and private equity companies will hit the Congressional floor. Presently, the performance fees managers levy are taxed at the 15% capital gains rate, rather than the higher income tax rate of 35%. The tax, if adopted, could mean $4 billion to $6 billion more in government coffers, and help offset the alternative minimum tax many Americans now pay, according to the Treasury department. Many credit the tax advantage with helping the incredible wealth among hedge fund managers. The U.S. Chamber of Commerce and the nascent Private Equity Council have begun ardent lobbying efforts against the proposal. “It gives an advantage to some people depending on how they set up their tax structure,” said U.S. House Ways and Means Committee Chairman Charles Rangel (D-N.Y.). “And we believe that’s not how it should be.” The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.

Bear Stearns will provide up to $3.2 billion to finance its struggling hedge fund, according to Reuters. Bear said it provided secured financing to the High Grade Structured Credit Strategies Fund, which, according to a source familiar with the situation, was down about 5% through April. The financing will eliminate exposure that Citigroup and Barclays had in the fund, sources said. A restructuring plan is still being worked on with creditors for the second fund, sources said. The High Grade Structured Credit Strategies Enhanced Leverage Fund was down 23% for the year by the end of April. The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.

The U.S. District Court for the Southern District of New York has entered its final judgment against Scott A. Christian, a former broker for Trautman Wasserman, for his role in market timing and late trading. Without admitting or denying the Securities and Exchange Commission’s charges, Christian consented to a $250,000 fine. According to the SEC’s complaint, Christian enabled a number of the brokerage’s customers to late trade mutual funds by time stamping their orders before the market’s 4 p.m. close but submitted the orders as late as 6:30. Forty fund companies sent more than 300 letters both to Christian and Trautman Wasserman asking them to stop the excessive trading. To circumvent their scrutiny, Christian then opened up multiple accounts for his customers and used various registered representative identification numbers. A related case against six other principals of the firm is still pending. They are Gregory O. Trautman, Samuel M. Wasserman, James A. Wilson, Jr., Mark Barbera, Jerome Snyder and Forde H. Prigot.

In the interest of increasing the number of exchange-traded funds available in Japan and preparing itself to go public, the Tokyo Stock Exchange plans to change its rules to allow non-Japanese ETFs to be listed, according to The Nikkei Report. Domestic ETFs in Japan, by law, can use only the Nikkei Stock Average and Topix as the indexes on which to base the funds. As a result, when it comes to ETFs, investors on the Tokyo Exchange have only 11 choices. The rules on foreign ETFs are expected to be far less restrictive. For example, the Tokyo Exchange expects the Financial Services Agency to allow ETFs based on commodities indexes. The Tokyo Exchange is aiming to make ETFs the core product of its investment offerings before going public, an event tentatively slated for 2009. The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.

Benjamin Edwards III, retired chief executive of A.G. Edwards, questioned and commented on the $6.8 billion deal with Wachovia Corp. Thursday at a shareholder meeting, according to the St. Louis Post-Dispatch. Edwards, who retired in 2001, called the merger “devastating news” and said his heart goes out to the Wachovia and Edwards employees who will lose their jobs when the firms merge. “We wonder if being number two is worth thousands of careers,” he said. Wachovia Securities is moving its operations to St. Louis from Richmond, Va., and once the merger is complete, it will be the nation’s second-largest brokerage firm, with 15,000 brokers. Robert Bagby, A.G. Edwards’ chairman and chief executive, said after the meeting that he wasn’t surprised by Edwards’ speech because he knew he was opposed to the deal. The merger “is a huge opportunity for the city and for A.G. Edwards. It’s a huge opportunity for our clients to move forward,” said Bagby. It “puts us in a position to never be a target again.” In his speech, Edwards questioned whether the company’s values will endure after the merger. “We thought we had built something special, a company that puts clients first, employees second and shareholders third,” he said. Later adding, “I believed we had the people, the client base, the physical plant the capital and the operating ethic to give us another exciting and enjoyable 120 years.” Edwards also said A.G. Edwards’ employees “feel lied to and betrayed.” He urged the company to preserve Edwards’ branch network and to resist the urge to close any branches over the objections of a branch manager. If the company does that, he said, it risks losing the manager and the brokers at that branch. The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.