Regulation

As significant federal regulation passed earlier this year begins to take effect, industry professionals are seeking greater guidance from the Securities and Exchange Commission on specific reporting mandates and examining the benefits of implementing optional requirements.

Canadian regulators announced potential enforcement proceedings against four of the largest Canadian mutual fund companies last week, as the fund industry market-timing scandal expanded north of the border.

Daniel Calugar strikes again. If there is one name you don't want in your client book of business, aside from Eddie Stern, it is Calugar's. For the second time this summer, Franklin Resources has paid for its dealing with the mysterious Las Vegas investor.

DALLAS -- Separately managed accounts, now with a combined $529 billion in assets under management, appear headed for a more stringent regulatory landscape. While the tax-efficient investment vehicles geared toward the high net worth have enjoyed tremendous growth in the last five years with little agitation from regulators, the industry sees rougher terrain ahead.

Putnam Investments on Thursday made a "groundbreaking commitment" to provide retail investors much of the same information institutional clients often demand, according to an announcement by the firm, the California State Treasurer, and pension groups CalPERS and CalSTRS.

The Securities and Exchange Commission has issued an adopting release that formalizes an amendment to Rule 12b-1 that prohibits funds from selecting broker/dealers for portfolio transactions based upon their sales of mutual funds. Fund companies must comply with the order by Dec. 13. Funds are not banned outright from choosing a broker/dealer that sells its funds to execute portfolio trades. Instead, the SEC requires that funds ensure selling agreements do not influence that decision.

Three firms affiliated with PIMCO equity funds agreed to pay $50 million to settle fraud charges related to a market-timing scheme that bilked long-term shareholders.

Charles Schwab & Co. agreed last Tuesday to pay $350,000 to settle charges that it improperly permitted investment advisor customers to alter mutual fund orders after the closing bell.

NEW YORK -- Using 12b-1 fees to pay brokers for selling mutual funds has morphed the fund business into a massive marketing machine, a development that has sparked controversy over the best way for fund companies to finance distribution.

The Securities and Exchange Commission said it would forge ahead with a new rule effective January 2006 requiring 75% of mutual fund boards to be comprised of independent directors and overseen by an independent chairman. The U.S. Chamber of Commerce sued the SEC on Sept. 2, charging that it had overstepped its rulemaking authority.