Regulation

The NASD has fined five brokerage firms $625,000 for failure to have the supervisory systems in place to detect and prevent late trading. The five are D.A. Davidson & Co., T.D. Waterhouse Investor Services, Stifel Nicolaus & Co., National Planning Corp. and SII Investments, Inc. Each of these firms processed trades after the 4 p.m. close of the market, the NASD said.

Bank One Corp.'s mutual fund arm on Tuesday agreed to a $90 million settlement with New York state and federal regulators for allowing hedge funds to engage in abusive round-trip trading of its fund shares, a racket that depleted the returns of long-term shareholders.

In a new era for independent directors, Dawn-Marie Driscoll, already a busy woman, is likely to be even more in demand. She is president of Driscoll Associates, a Cape Coral, Fla.-based business ethics consulting firm, and executive fellow and advisory board member at the Center for Business Ethics at Bentley College in Waltham, Mass. In addition, she serves as an independent trustee and board chairman for the mutual funds at Scudder Investments and serves on the board of governors of the Investment Company Institute. She has also been a member of the ICI directors' services committee since its 1995 formation and served as its chairman from 1998 to 2002.

CHICAGO--During a star-studded Morningstar investment conference panel, investor advocate Mercer Bullard called for a complete overhaul of the way fund companies conduct business, while Bob Pozen and Ed Haldeman warned of the unintended consequences of overzealous regulation.

There was no place of refuge for tainted mutual fund shop Pilgrim Baxter & Associates, as the company last Monday agreed to a $100 million settlement with regulators for engaging in abusive trading practices.

Some states are unfairly discriminating against investors choosing to invest in 529 college savings plans outside of the state in which they reside, creating mounting problems for the industry, according to a recent white paper by the College Savings Foundation (CSF).

For mutual funds, it was the shot heard round the world.

Rep. Paul Gillmore (R-Ohio) has introduced a companion bill in the House to the Mutual Fund Reform Act sponsored by Senator Peter Fitzgerald (R-Ill.) in the Senate. A companion bill is similar or identical to another piece of legislation introduced in the opposite house of Congress. Fitzgerald's bill aims to ban 12b-1 fees and improve disclosure on mutual fund fees so that consumers can more easily compare what they pay for competing funds.

Morningstar Managing Director Don Phillips has been a visible industry figure since the scandal broke, calling for investors to avoid certain shops entangled in the scandal as well as urging the industry to adopt several reforms. MME Associate Editor Chris Frankie sat down with Phillips just before the Morningstar Investment Conference to get his views on the ICI's new president, Congress and investors.

SEC Commissioner Cynthia Glassman last week said she is not sold on the agency's rule proposals requiring an independent chairman and the implementation of a mandatory redemption fee.