Regulation

The Securities and Exchange Commission may bring enforcement action against the Reserve Management Company and its managers for possible violations of federal securities laws.Reserve Management president Bruce Bent and his two sons Bruce Bent II and Arthur Bent III, who are senior executives at the firm, have said they will cooperate with an SEC investigation, but "expect to defend vigorously against the allegations."The Reserve's Primary Fund nearly created a panic in mid September when it announced that it "broke the buck," falling below the implied guarantee of $1 per share. Billions of dollars in assets flew out of other money market mutual funds in the following days, but money fund assets have since recovered at most shops, in some cases soaring.Since then, virtually all of Reserve's funds have frozen withdrawals and announced plans to liquidate.Investment firm Ameriprise Financial Inc. is suing the Reserve in federal court for allegedly telling some of its investors in advance that it was in danger of breaking the buck.A few weeks ago, Reserve admitted it gave inaccurate information to investors, saying the Primary fund actually broke the buck five hours earlier than initially reported.

Class-action lawsuits are projected to reach 267 this year, a 37% increase from 2007 and the largest annual total since 2002, according to NERA Economic Consulting, which attributes the sharp rise to the credit crisis.

Relief for retired seniors may come too late if the Treasury Department doesn’t change the rules on mandatory withdrawals from 401(k) plans this year.

Former hedge fund Bayou Management executive Samuel Israel III was ordered on Friday to undergo medical and psychological tests at the Devens Federal Medical Center prison in Massachusetts in the last week of December. U.S. District Judge Kenneth Karas ordered the tests to determine whether Israel is competent to have pled guilty to bail jumping.

President-elect Barack Obama has named regulatory veteran Mary Schapiro to lead the Securities and Exchange Commission after he takes office next month.

Fidelity Investments has been taking advantage of new changes to 403(b) regulations to expand its presence in the higher education retirement business, adding more than 50 new plans this year.

The U.S. could see a 70% decline in the number of mutual fund families over the next five years unless regulations are changed to put them on a more equal footing with hedge funds, according to a new report by the Boston research firm Celent, titled: “The Global Credit Crisis: Implications for North American Wealth Management.”

In a final year-end push, the Securities and Exchange Commission voted 4-1 Wednesday to require mutual funds and the top 500 largest public companies to begin filing financial reports using eXtensible Business Reporting Language (XBRL).

By overturning a lower court's dismissal of a case against former Columbia Funds executives James Tambone and Robert Hussey, the U.S. Court of Appeals for the First Circuit is permitting the Securities and Exchange Commission to proceed with its market-timing lawsuit against the two men.

Ready or not, the deadline to update 403(b) plans is here.