Regulation

A U.S. subsidiary of Dutch financial services firm ING Group indicated in an SEC filing that the NASD has made a preliminary recommendation that an enforcement action be brought against the affiliate and one of its registered agents. ING Insurance Co. of America said that ING Funds Distributor had received a notice from the regulatory agency and it has an opportunity to respond before NASD staff makes a final recommendation. At issue are three arrangements dating back to 1995, 1996 and 1998 in which the administrator to the then-Pilgrim Funds allowed frequent trading. The Pilgrim Funds later became part of the ING Funds. In September, ING said that an internal review of its mutual fund trading operation showed only isolated incidents of impropriety.

From Sarbanes-Oxley reforms to anti-money laundering rules to the USA PATRIOT Act, the rate of regulatory change within the investment management industry has dramatically increased over the last several years. Mutual fund managers now find themselves dividing their time between meeting the requirements of new laws and maintaining their primary focus of managing and growing assets.

Much as we'd like to move along to something else, we're forced by current events to end the year with yet another discussion of compliance jobs. One year ago, we had Eliot Spitzer to thank for moving the noble profession of compliance professional out of the wings and directly onto center stage. Here we go again.

Franklin Templeton Investments filed "false and misleading statements" with the Securities and Exchange Commission by not admitting to wrongdoing in settling its mutual fund case, Massachusetts Secretary of the Commonwealth William Galvin has charged.

The NASD has fined Citigroup Global Markets $250,000 for distributing inappropriate hedge fund sales literature. The penalty marks the agency's heftiest fine for abusive hedge fund sales practices by broker/dealers.

The Securities and Exchange Commission reportedly fears that investment companies may have paid retirement-plan consultants in order to steer business their way. A probe that began last December looking into possible conflicts of interest in the financial-services industry has uncovered troubling evidence of improper payments to the pension planners, according to the SEC.

It's official. In a highly anticipated move, the Securities and Exchange Commission voted 3-2 in favor of requiring hedge fund managers to register as investment advisors with the agency last week.

Larry Lasser: $78 million.

NEW YORK -- Some fund investors have lost that loving feeling.

The Securities and Exchange Commission's ban on funds directing trades to brokers in exchange for shelf space, or directed brokerage, has mutual fund companies scurrying for new ways to compensate distributors.