Regulation

The Investment Company Institute announced Tuesday that it is forming a money market mutual fund working group, to be chaired by Vanguard Chairman John Brennan.

Unlike most other markets around the world where hedge funds are allowed to take almost any risks they deem fit, including leveraging their holdings to place outsized bets, Brazil’s hedge fund managers must comply with strict parameters, Dow Jones reports. That means they cannot take margin or collateral calls.

In response to the Securities and Exchange Commission’s charges that it spent more than $600,000 on improper gifts and entertainment for Fidelity Investments traders, Lazard Capital Markets is paying $2.8 million to settle the charges.

NEW YORK - The fragmented, free-for-all liquidity in the marketplace is aggravating the extreme volatility in the stock market, and experts say a more organized, specialized system is needed.

The Reserve Management Company has begun making distributions to shareholders at an initial rate of 50 cents on the dollar, and its president says the company plans to pay the rest soon.

The Depository Trust & Clearing Corporation (DTCC) will begin publishing aggregate market data on credit derivatives, starting Nov. 4.

American International Group Inc. (AIG) is rapidly depleting the $123 billion in loans it has received from the Federal Reserve, according to a report in the New York Times.

Bank of America has sued two former bond managers at Bear Stearns, Ralph Cioffi and Matthew Tannin, who unloaded shares in subprime mortgage instruments they personally held in bond funds just prior to those instruments losing $1 billion in value.

The saga of Samuel Israel continues, with the $450 million Bayou hedge fund swindler now being sent to federal medical prison forpsychiatric evaluation. U.S. White Plains District Court Judge Kenneth Karas has sent Israel to Butner North Carolina Federal Medical Center for a complete medical and psychological evaluation, which could take up to 90 days.

Mary Schapiro, chief executive officer of the Financial Industry Regulatory Authority, recommended that the brokerage industry be continue to be self-regulatory, but overseen by one tier looking for systemic risk and another scrutinizing business conduct. Schapiro made the remarks at the annual meeting of the Securities Industry and Financial Markets Association.