Special Program Root Tag

Fidelity Investments announced Tuesday that Ellyn A. McColgan, president of distribution and operations, has resigned “in order to pursue opportunities outside of the company.”

More and more financial advisers are turning to exchange-traded funds to build the core of their client’s portfolios, The Wall Street Journal reports.

DWS Scudder has launched an alternative asset allocation fund. A fund-of-funds, the DWS Alternative Asset Allocation Plus fund will invest in stocks and derivatives, as well as market-neutral, inflation-protected, commodity, real estate and emerging markets assets.

A number of managers of value mutual funds are looking to Pakistan, saying that investors misjudged the nation’s political risk, Dow Jones reports.

Annuities are likely to make more appearances in the slate of offerings among defined contribution plans, according to investment consulting firm Watson Wyatt Worldwide.

The subprime mortgage crisis appears to be spreading beyond the credit markets, dampening not only the U.S. stock market, but also international markets.

The North Carolina State Legislature voted to increase the amount 529 college savings plans participants can deduct for tax year 2007. The plan, which was named a “top choice” by Money magazine, is managed by Upromise. The law, which as been signed by Governor Mike Easley, allows married North Carolina couples contributing to the plan to deduct contributions up to $5,000, compared to $4,000 for 2006. Single contributors can deduct $2,500, compared to $2,000 a year ago. The plan offers 15 options from providers including Wachovia’s Evergreen Investments, Vanguard, J. &. W. Seligman and MetLife.

Although the Department of Labor hasn’t issued guidance yet on what acceptable default options should be in 401(k) plans, many sponsors are embracing target-date and target-risk funds, Dow Jones reports.

A number of hedge funds that have shared their July results appear to have fared very well by placing bets against subprime loans and other risky debt, The Wall Street Journal reports.One fund that did exceptionally well in July is Hayman Capital Partners, up 60% in July and 240% year to date. “The availability of credit has disappeared, and there are $220 billion of [leveraged-buyout] loans that need to be financed,” said Hayman Managing Partner J. Kyle Bass. “It is going to smoke investment banks, and many more funds will be carried out.”

The Government Accountability Office says more Americans need to work longer to live well in retirement, the Post-Herald of Syracuse reports. “We, along with the others, have suggested that increasing labor force participation for older workers could lessen problems for the economy and Social Security and Medicare trust funds, and boost income security for retirees as well,” the July report reads. The report, commissioned by Congress, offers suggestions for policy changes in the Social Security, healthcare and tax systems to encourage workers to retire later. The report adds to the chorus of those who would like the federal government to increase the minimum age at which individuals can claim Social Security, which is now 62. Since that age was set, life expectancies have risen, and work itself has gotten less physically taxing. Those who retire at 65 can apply for full benefits, including Medicare health benefits. Yet, 46% of workers retire before age 63, according to a study by the University of Michigan cited in the report. For those born after 1960 the magic number should be 67, according to the report. Those who work until age 70 should get a premium. Another policy area the report says should get greater attention is tax policy. People can begin to withdraw money without any penalties from their Individual Retirement Accounts at age 59 ½. The later that option is penalty free, the longer people are likely to stay in the workforce, contributing to Medicare and Social Security as they go, the report notes. “It’s not that the government doesn’t want you to retire; it’s that it can’t afford to pay the benefits to people,” said Mitch Franklin, an assistant professor of accounting at Syracuse University. “It all goes down to being able to find people in retirement,” Franklin said. The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.

Despite having a slew of claims dismissed in a New York State courtroom, H&R Block now faces a series of 12 cases in a federal courtroom in Missouri regarding the sales practices of the company’s Express IRA product, according to the Kansas City Star. Plaintiffs hold that the Kansas City-based chain tricked consumers by failing to disclose expenses, and by offering investment options it knew were inferior, claims H&R Block denies. The fact that the judge allowed the claims says nothing about the “viability of the plaintiff’s allegations or legal theories,” the company said through a statement. “We continue to believe that the substance and the facts of the case are on our side, and we are committed to mounting a vigorous defense of the Express IRA, which has helped hundreds of thousands of people begin saving, many for the first time,” the statement said. H&R Block has sold more than 600,000 of these accounts, which use tax refund money to open an IRA for the consumer. The company claims those accounts represent $360 million in savings. The problem has been that the account’s only investment option is a money market fund managed by Reserve Fund of New York. Plaintiffs argue that as early as 2002, the company knew that the fund’s returns we below market, and that the account fees ate into investor gains. New York State Judge Karla Moskowitz ruled that state law gave her no jurisdiction over the company, but did let stand two claims including fraud and deceptive practices. But U.S. District Judge Richard E. Dorr in the Western District of Missouri ruled that the plaintiffs had met a reasonable burden of proof, and that the case will be allowed to go forward, despite H&R Block’s efforts to get it dismissed. At the same time, H&R Block’s poor performance has lead Greenwich-based hedge fund Breeden Capital Management to attempt to takeover the company’s board. Breeden, which has forced a proxy presenting three of its own candidates for the board, claims that H&R Block’s missteps have cost shareholders $4.5 billion. The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.

A former mutual fund portfolio manager with U.S. Bancorp, now known as FAF Advisors, settled charges by the Securities and Exchange Commission that he accessed non-public information on shares of XOMA that prompted him to sell all 332,000 of his shares, worth $2.5 million. Joe Frohana, manager of the First American Investment Fund, allegedly accessed a report on a drug that XOMA and Genetech were jointly developing that his brother was conducting. The purpose of the study was to determine if the drug had bio-equivalence. Frohana’s brother informed him on April 3, 2002 that the results were negative. On the following day, Frohana sold all of his shares. The next day, when the two biotechnology companies made the information public, the stock plummeted 42%, which would have hit Frohana’s fund with a $954,776 loss. Without admitting to or denying the allegations, Frohana consented to the SEC’s findings that he is permanently prohibited from violating antifraud provisions of the federal securities laws and must pay $954,776 in disgorgement, plus $325,286.57 in interest, as well as a civil penalty of $954,776.

The U.S. House of Representatives overwhelmingly passed two bills that would prevent lawsuits against mutual and pension funds that divest holdings in companies that are doing business in Darfur and Iran.

Globalization may be coming in baby steps. In the effort to move to a single, universal financial reporting standard, the Securities and Exchange Commission voted unanimously last month to open for public comment a proposal to allow U.S. companies-including investment companies-to use International Financial Reporting Standards (IFRS) for their SEC filings, rather than U.S. Generally Accepted Accounting Principles (GAAP).

Relaxation of Sarbanes-Oxley audit and reporting rules passed unanimously by the Securities and Exchange Commission last month may address the burdensome compliance costs of the law that companies-especially small ones-complained about, but it probably won't be enough to reverse the small-cap slide.

Workers are starting to catch on to all the ominous warnings of what will happen if they don't save enough for retirement, and the average 401(k) account increased 17% in 2006 from the previous year.

The subprime mortgage crisis appears to be spreading beyond the credit markets, dampening not only the U.S. stock market, but also international markets.

BoA Snags Jeffrey Carney From Fidelity Investments

Wrobleske, Ngugi, Reyes Now With Stanford Group

It was 1997. Florida beat Cleveland in the World Series, Harry Potter was not yet a household name and Y2K was barely a gleam in programmers' eyes. That was also the year my firm, Corporate Insight, began tracking the online brokerage world with the e-Monitor service.