Money Management Executive Latest News

Charles Schwab announced Thursday that it has promoted Walt Bettinger from executive vice president and head of Schwab Investor Services to president and chief operating officer.

Following a rash of acquisitions of asset management firms by fund companies, many are now populating their lifecycle funds with new offerings from their target acquisitions, The Wall Street Journal reports. Three such companies to do so include Legg Mason, Amvescap and Principal Financial.

The President’s Working Group on Financial Markets issued a report Thursday that did not call for additional hedge fund regulation but that asks regulators to pay closer attention to their counterparties, such as banks, that might be able to detect questionable transaction activity, The Wall Street Journal reports.

Standard & Poor’s announced Thursday it is selling its mutual fund data business to Morningstar for $55 million in cash so that it can focus on its core analytical services, which includes fund management ratings and research.

A hedge fund manager in Washington has been charged with defrauding many Maryland residents of millions of dollars after he solicited their money at free lunch seminars and hid losses with phony statements, according to The Washington Post. John Williams violated eight civil statutes of state security laws, Attorney General Douglas F. Gansler said. Williams’ firm’s assets were frozen by Prince George’s County Circuit Court. William met Canadian hedge fund trader Stephen Chesnowitz in an Internet chat room and they became involved in the scheme, according to a court filing by Gansler’s office. The two men lured people through mass mailing advertisements offering a free “gourmet meal” and the opportunity to “earn excellent returns with a guarantee against market risk.” More than 150 people went to the seminars, and Williams collected a total of $9 million. He then transferred the money to Chesnowitz’s hedge funds in Canada and Cayman Islands. Once the money was made, the two invested in unstable investments, including a financial firm that has since become defunct, a bed and breakfast in Canada, and two vintage cars, according to the court filing. Investors were never told about the deals. Investors were able to log on to a website to check on how the hedge funds were doing, and the false statements showed investments were profitable. In one day, April 28, 2006, the hedge fund suffered $626,280 in losses, the filing said. Williams, “knowing the money was gone, continued to take fees” based on phantom returns, the court filing said. In total, Williams paid himself $586,000 for managing the investments. Chesnowitz has not been charged, but officials are looking into his activities. The investigation could be hindered because he is not located in the U.S. 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.

Should the market pull back, many exchange-traded funds will likely be shut down, financial advisers tell The Wall Street Journal. Investment advisors have been so quick to bring new ETFs to market that all the major indexes have been exhausted—leaving them no other recourse but to bring forth increasingly esoteric ETFs based on miniscule segments of the market.

Lehman Brothers and Fidelity Investments announced Wednesday that they have linked their electronic trading platforms.

Although Fidelity Investments’ revenue in 2006 rose 16%, its profits decreased 11%, primarily because the firm reinvested them in new businesses to diversify and expand revenue streams, the Associated Press reports. Businesses in which it invested money for research, technology and advertising include employee benefits and expanding its bank and insurance channels.

Fidelity Investments has named the son of Chairman Edward C. Johnson III, Edward C. Johnson IV, a member of the FMR Corp. fund board and promoted his daughter, Abigail Johnson, who already was a director, to serve as one of the board’s three vice chairmen, the Associated Press reports.

The NASD announced Wednesday it has fined Raymond James $2.75 million for lax supervision of 1,000 of its producing branch managers between 2000 and 2004.