Regulation

The Securities and Exchange Commission has begun sending investors checks from the $267 million fair funds distribution fund that came out of a 2006 settlement with Bear Stearns over late trading and market timing in mutual funds.

Following the ponzi scheme of Bernard Madoff, the Securities and Exchange Commission is considering tougher investment advisor rules. One measure the SEC approved Thursday, by a 5-0 vote, is surprise exams, to ensure that investors’ money is intact at a broker/dealer, custodian or bank. The plan is open for public comment.“We are taking this action in response to major investment scams, such as Madoff and many other potential Ponzi schemes,” said SEC Chairman Mary Schapiro. “A surprise exam would provide another set of eyes on clients’ assets and provide additional protection against theft or misuse.”For those advisors, like Madoff, who hold custody of clients’ assets directly, the SEC would require a written review by a certified public accountant.

The Securities and Exchange Commission and the Department of Labor will hold a joint hearing on June 18 at DOL headquarters examining target-date funds.

SEC May Propose New Money Fund Rules in June, Chairman Says

New Internal Revenue Service accounting rules aim to reconfigure the way investors report gains and losses when they sell stocks and mutual funds by putting the burden on those who handle the transactions.

For years, Americans enjoyed the "wealth effect," the sense that their assets were gaining value rapidly enough that they didn't have to save much. This perception of ever-expanding prosperity gave them freedom to spend lavishly and enjoy life. The effect was a function of feeling wealthy as well as being wealthy.

WASHINGTON — Securities and Exchange Commission Chairman Mary Schapiro, speaking before the Investment Company Institute’ s General Membership Meeting, said she favors the creation of a council of existing regulators to oversee risk in the financial markets, rather than granting that authority to a single regulator.

WASHINGTON—At a separate summit on 401(k) reform during last weeks General Membership Meeting of the Investment Company Institute, Putnam Investments CEO Robert L. Reynolds called for sweeping retirement reform, beginning with mandatory automatic enrollment in qualified default options, savings escalation, the inclusion of retirement income options and full advice on asset allocation and retirement planning.

The Securities and Exchange Commission has filed fraud charges against the Reserve Primary Fund and its officers for failing to disclose the fund’s vulnerability to Lehman Brothers, as it filed for bankruptcy, instead falsely assuring investors that it would support the fund’s $1 net asset value.

The current regulation that allows hedge funds and other advisers with fewer than 15 clients not to register with the Securities and Exchange Commission is a “gap [that] doesn’t make sense,” said Andrew Donohue, director of the division of investment management, speaking before the Mutual Fund Directors Forum.