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Small-cap stocks are once again outperforming large-cap stocks in the market so far this year, according to Bloomberg columnist Chet Currier.Through the middle of last week, according to Bloomberg data, the Standard & Poor’s 600 Smallcap Index showed a year-to-date advance of 2.9 %, including dividends, while the S&P 500 Index, mostly comprised of large stocks, struggled to a 0.4 % gain.

Mutual funds are suggesting sweeping investment policy changes for the coming year, and hoping shareholders will allow them to put more money in foreign stocks and real estate, according to The Wall Street Journal.

A number of illegal funds that purport to deliver high returns in foreign investments are soliciting assets from Chinese investors, China Daily reports. One such fund, the Switzerland Mutual Fund, promises a 300% return within 450 days and has raised $12.9 million since it launched late last year.As a result, China’s foreign exchange regulator, the State Administration of Foreign Exchange, is warning investors against the scam.

A judge has ruled that Keith Tucker, the former chief executive officer of Waddell & Reed, was, indeed a resident of Kansas City between 1999 and 2003, not Texas, and that he must pay $1.2 million in taxes, penalties and interest. Jackson County Circuit Court Judge John M. Torrence made the ruling, The Kansas City Star reports.

The April 16 deadline for fund companies and their intermediaries to ink information-sharing agreements in compliance with Rule 22c-2 has set off a flurry of negotiations and shifted attention to the next component of the rule: data analysis.

The comment period for the independent directors rule ended a month ago, and as the Securities and Exchange Commis-sion nears a vote on the measure, speculation is increasing that it will bend to the industry's fierce opposition to having fund boards run by independent chairmen. SEC Chairman Christopher Cox recently said that one alternative might be appointing a lead independent director, and industry insiders have indicated that the SEC might merely call having an independent chairman a "best practice."

Beacon Rock Settles Timing Case for $475K

Just as the Oscar buzz surrounding Al Gore's documentary "An Inconvenient Truth" pushed discussions about global warming out of academia and into living rooms across the country, environmental awareness and a solid track record have helped propel once-niche socially responsible mutual funds into the retail arena.

Most alternative investment products are neither well-understood nor on the shopping lists of affluent investors with $500,000 or more investable assets. Moreover, fewer than one-third discuss including alternative investments in their portfolios with financial advisers.

While exchange-traded funds have yet to offer an actively managed variety, they are creeping in that direction through elaborate indexes, many of them based on quantitative models, Morningstar reports. These quantitative funds use computer models to screen for stocks based on such set criteria as valuation, strength and momentum.

Although hedge funds didn’t deliver stellar returns in 2006, many of them trailing major stock indexes, their assets rose 30% to $2 trillion worldwide, Bloomberg reports, citing a report from HedgeFund Intelligence. Last year, the average hedge fund returned 13%, compared to the S&P 500 Index’s 16% return and the MSCI World Index’s 21% gain.

The case that Massachusetts brought against Philip Goldstein’s Bulldog Investors hedge fund for soliciting investors over the Internet saw its first fireworks on Friday, when Bulldog filed a motion on Friday to have the Massachusetts Superior Court hear its case, HedgeWorld News reports. Bulldog wants its case heard in that venue rather than by the Massachusetts Securities Division so that it can mount a full defense, one centered on its First Amendment free speech rights. Goldstein says that the Division will not judge his case impartially.

Fidelity Investments is going to close down its 401(k) and enhance its 401(k) by raising company matches from 5% to 7%, the Associated Press reports. The company is also going to offer employees a health-savings credit they can use in retirement. Those who have existing pension benefits will be given the choice of rolling them into a profit-sharing plan or accepting them as annuities at retirement.

An NASD arbitration panel has ordered AllianceBernstein to pay a former top salesman $3.1 million, upholding his lawsuit against the firm for having been fired for his part in the firm’s mutual fund timing scandal, The Wall Street Journal reports. Charles Schaffran said the company defamed him.

Wells Fargo customers who have at least $25,000 in assets and/or loans can now make up to 100 free stock and no-load mutual fund trades a year, the San Francisco Chronicle reports. However, only 10% of a home mortgage can be counted toward the loan portion. Trades numbering above 100 a year will cost $5.95 apiece.

While the financial services industry grew an average of 3.5% between 2004 and 2005, it expanded only 1% in Massachusetts, Bloomberg reports, citing a new report from McKinsey. At this rate, the state is losing ground as one of the nation’s major finance hubs, the report concludes.

The U.S. Department of Labor has filed two lawsuits against Prime Care Services, the trustee of the 401(k) and pension plans in Southfield, Mich. The DOL says the trustee failed to close the plans and distribute $1,155,943 in assets to participants. The DOL wants to appoint an independent fiduciary to make the distributions.

A number of illegal funds that purport to deliver high returns in foreign investments are soliciting assets from Chinese investors, China Daily reports. One such fund, the Switzerland Mutual Fund, promises a 300% return within 450 days and has raised $12.9 million since it launched late last year.

The U.S. District Court of the Southern District of New York has upheld a $14 million award that a New York Stock Exchange arbitration panel awarded to three former Merrill Lynch brokers who lost their jobs for allegedly timing mutual funds, Dow Jones reports. The three, Christopher Chung, William Savino and Kevin Brunnock, were fired in October 2003.

Mercer Bullard, founder of Fund Democracy, doesn’t expect the Securities and Exchange Commission to pass the controversial rule that would require fund companies to have 75% of their boards, including the chairman, be independent, MarketWatch reports. But that isn’t stopping him from pressing the SEC to do what he believes is the right thing.