Money Management Executive Latest News

Invesco Funds Group is the next fund company to face securities fraud charges, The Wall Street Journal reports this morning, in an expose on how some of the firm’s fund managers fought with top executives over their decision to permit market timing.

Individual investors will be represented for the first time on the New York Stock Exchange board of executives, the board voted late last week.

New York Attorney General Eliot Spitzer arrested three former executives of Security Trust Co. on felony charges last Tuesday. His suit charges the men with grand larceny in the first degree, for stealing more than $1 million.

Cigna Corp.'s sale of its pension and 401(k) business to Prudential Financial for $2.1 billion in cash vaults Prudential into the top tier of the country's leading retirement services and products providers. The transaction, expected to close early next year, will plump Prudential Retirement's assets to nearly $120 billion and expand its participant base to 2 million.

While many of the firms implicated in the fund scandal are worrying over civil and criminal charges, the publicly traded companies are fretting over their market value. The day after it acknowledged it might have permitted five institutional clients to market time its Excelsior Funds, Charles Schwab's stock lost nearly 8%, or $1.4 billion of its market value, while American Express and PNC Financial Services Group, which also said they are being investigated, lost around 1% apiece.

Morningstar has recommended that investors dump shares of 11 PBHG funds after its founders were charged with securities fraud for allowing two of the firm's clients to trade billions of dollars in and out of its funds.

Who says a lion and a bear can't cohabitate?

The country's second-largest securities firm, Morgan Stanley, agreed to a $50 million settlement after the SEC found that 16 "preferred" funds compensated Morgan Stanley brokers for an extra marketing push by allowing the firm to handle more of its stock and bond trading. That extra trading business, in turn, resulted in millions of dollars in additional commissions for the broker/dealer.

Even with the probes and charges of New York, Massachusetts and federal regulators widening to unprecedented lengths, stock funds netted $23.8 billion in October, according to Lipper's month-end analysis.

Viewed as watchdogs by some and lapdogs by critics, mutual fund boards have arguably seen their responsibilities grow alongside the complexity and demands of the business. Directors have recently come under fire as a result of Eliot Spitzer's probe into fund trading, as they were presumably unaware of the violations. Questions of board due diligence and the adequacy of the governance structure obviously emerge.