Money Management Executive Latest News

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.

The fund industry scandal has cast market timing, and frequent trading as bad news for mutual fund investors. But when the "timers" are actually fund portfolio managers whose dizzying spinning in and out of securities is eagerly embraced as a part of their core investment strategy, is the news still bad for investors, or is outperformance the result?

With exchange-traded funds rapidly becoming more mainstream investment vehicles, a debate has emerged over how to maximize their tax-efficiency capabilities.

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.

Barclay's Global Investors (BGI) is launching nine new exchange-traded funds based on the Morningstar style box methodology, a move that will bolster its already dominant position in the ETF space. Barclay's owns more than 65% of the market share in the ETF business.

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.

Janus Capital Group appointed two independent directors to its board. To make room on the board, Helen Young Hayes, whose term expires in May, will step down, the company said. She was a managing director of investments and managed Janus' international stock funds before she resigned last April.

Siebert Financial said Robert P. Mazzarella has been elected to its board and as an independent member of its audit committee.

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.