Regulation

ICI President Paul Schott Stevens said last week that his agency is firmly behind reform in the industry and called on the SEC to "administer strong medicine to prevent trading abuses in the future."

The former CEO of Putnam Investments, Lawrence J. Lasser, has settled his severance package dispute with the company and will receive $78 million from the parent firm, Marsh & McLennan.

Securities Industry Association President Mark Lacritz warned that the mutual fund and corporate scandals and resulting new compliance requirements have put both technology and financial services firms in a touch spot, he told 700 delegates at the annual SIA technology management conference in New York.

Charles Schwab CEO David Pottruck said he expects scandals afflicting the financial services industry to continue. "There will continue to be new investigations and new revelations. There are still things to find in this industry," Pottruck told a business conference in New York. While declining to elaborate on his statements, he said the industry still employs questionable practices.

The notion that the fund scandal is all but over has been gaining steam in the general press and among some in the industry recently, but the reality is that while it has been a long, hard nine months, the mutual fund industry is far from out of the woods. Disinterest should not be mistaken for inactivity.

They were seven and they fought like seven hundred. That was the famous tag line of the classic 1960 western film "The Magnificent Seven," a tale about a septet of mercenaries called on to protect the inhabitants of a small village from being pillaged by outlaws.

Schwab Institutional's assets under custody grew 4.5% in the first quarter, and the company's president said the industry's scandals and investigations played a role in some of the asset gains.

WASHINGTON - Insurance companies are soon to find enforcement actions against them aired for all to see. The Securities and Exchange Commission is working on cases in which insurers made special arrangements for market timing, according to Ari Gabinet, district administrator of the SEC's Philadelphia District Office. "You may expect to see more cases rising up," he told attendees at the Regulatory Affairs Conference sponsored by the National Association of Variable Annuities.

Davenport & Co., a Richmond, Va.-based brokerage firm, market timed variable annuity sub-accounts on behalf of two of its hedge fund clients, the National Association of Securities Dealers charged last week, ordering Davenport to pay $450,000 for improper trading.

Score one for the fund managers.