Regulation

The U.S. House of Representatives overwhelmingly passed two bills that would prevent lawsuits against mutual and pension funds that divest holdings in companies that are doing business in Darfur and Iran.

Globalization may be coming in baby steps. In the effort to move to a single, universal financial reporting standard, the Securities and Exchange Commission voted unanimously last month to open for public comment a proposal to allow U.S. companies-including investment companies-to use International Financial Reporting Standards (IFRS) for their SEC filings, rather than U.S. Generally Accepted Accounting Principles (GAAP).

Relaxation of Sarbanes-Oxley audit and reporting rules passed unanimously by the Securities and Exchange Commission last month may address the burdensome compliance costs of the law that companies-especially small ones-complained about, but it probably won't be enough to reverse the small-cap slide.

While we will certainly give credit to Eliot "The Steamroller" Spitzer for taking on illicit trading and sales activities in the mutual fund industry while he was New York attorney general, we wondered why, when he was running for governor, he accepted hundreds of thousands of dollars from hedge funds, which, after all, were at the heart of the scandal. It's entirely possible some of the funds that showered Spitzer with money conducted market timing or late trading. That would make his acceptance of their contributions a serious conflict of interest and, possibly, a tacit agreement not to indict them.

Citigroup's Smith Barney division has agreed to pay $50 million to settle market-timing charges by the New York Stock Exchange and New Jersey regulators. Of the $50 million total, $40 million will go to investors who were harmed by the activity.

While we will certainly give credit to Eliot "The Steamroller" Spitzer for taking on illicit trading and sales activities in the mutual fund industry while he was New York attorney general, we wondered why, when he was running for governor, he accepted hundreds of thousands of dollars from hedge funds, which, after all, were at the heart of the scandal. It's entirely possible some of the funds that showered Spitzer with money conducted market timing or late trading. That would make his acceptance of their contributions a serious conflict of interest and, possibly, a tacit agreement not to indict them.

Despite a recent survey that found 83% of executives believe that the Sarbanes-Oxley Act has had a positive impact on their company, industry experts do not agree.

Lake Shore Asset Management, a Chicago-based hedge fund, had $288 million of its assets frozen by a federal court last week, after regulators stated it overstated its holdings, according to Bloomberg News.

John Hancock has settled with the Securities and Exchange Commission on charges that it failed to disclose $14.8 million in revenue-sharing agreements with 55 brokerages between 2001 and 2004. In exchange for the payments, the brokerages promoted Hancock mutual funds and variable annuities and gave the investment management firm's marketing and sales staff access to their representatives at conferences and meetings.

Increased international competition, proxy votes and Sarbanes-Oxley were a few of the issues discussed during the House Financial Services Committee's review last week of the Securities and Exchange Commission's effectiveness in investor protection and market oversight.