Regulation

In rapid succession, several market-timing mutual fund cases have come and gone since Gary Pilgrim and Harold Baxter and the Wayne Pa.-based firm that bears their name, Pilgrim Baxter & Associates, were charged with fraud and skirting fiduciary responsibilities by regulators in mid-November, yet the case is still unresolved.

The National Association of Securities Dealers has slapped its first fine on a brokerage firm for violating NAV transfer program procedures.

WASHINGTON -- Flexing their muscles, Securities and Exchange Commission officials from around the nation told a group of lawyers here that while cooperation with regulators is essential, the bar has been raised in terms of penalties and no firm will avoid getting its medicine.

As legislators and regulators prepare to adopt more stringent regulation governing the mutual fund industry, some investment advisors will benefit from such rule changes while others will be harmed, according to Fitch Ratings.

Warren Buffet, in his widely anticipated annual to his Berkshire Hathaway shareholders, blasts fund companies that cheated millions of investors through market timing and late trading, as well as directors who fell short of their duties. Funds are in dire need of "truly independent directors" willing to fire investment managers who overcharge on fees or fail to put shareholder interests first, Buffet said in his report. CEOs of fund companies are grossly overpaid, he added, holding directors, themselves richly paid, to blame. Buffet also referred to the sale of Strong Funds, without naming the firm, as "a travesty." The real "acid test" of whether current investigations into Wall Street will lead to meaningful change, Buffet said, is whether firms are willing to bring the pay scales of their chief executive officers back down in line with reality.

MFS Investment Management has hired a new chief counsel and a compliance officer to oversee corporate governance and compliance procedures in the wake of its $350 million settlement with regulators last month.

NEW YORK -- Soft dollars and directed brokerage are appalling and must be eliminated. That's the tune we've been hearing almost uninterrupted for the last several months as regulators and lawmakers have unleashed the hounds on the fund industry. But not all are on board with the efforts to kill the practices.

Bank of America, the nation's third-largest bank, was slapped with a record $10 million fine last week for failing to comply with regulators' repeated requests for information during their probe of improper trading practices.

The National Association of Securities Dealers has slapped its first fine on a brokerage firm for violating NAV transfer program procedures.

Putnam Investments took the initial hit from the rash of sales and marketing executives defecting to Liberty Financial in the late 1990s, but it is Columbia, which since consumed Liberty, that is now poised to take a beating from the transaction.