Special Program Root Tag

Although regulators didn’t bring many cases against mutual fund companies in 2006, that doesn’t mean that their scrutiny is going to let up, according to a white paper from SEI.In fact, the Securities and Exchange Commission has indicated it will continue to crack down on abuses in the industry.

JPMorgan announced Monday that it is buying Integrated Investment Services from Western & Southern Financial Group. Terms of the deal, which is expected to close in the second quarter, were not disclosed.IIS provides fund accounting, fund administration and transfer agency services. The acquisition adds TA services to JPMorgan’s fund services suite, which also includes compliance reporting and investment analytics.

American Century Investments acquired the mutual fund assets of Minneapolis-based Kopp Investment Advisors Monday. Terms of the deal were not disclosed, but the Kansas City, Mo.-based shop has merged the small-cap Kopp Emerging Growth Fund into the American Century New Opportunities II Fund, and assets of the large-cap Kopp Total Quality Management Fund into the American Century Equity Growth Fund.Together, the acquisitions represent $225 million in new assets for American Century. The boards of both companies unanimously approved the transaction.

A federal bankruptcy judge ruled that investors in Bayou Management, a collapsed, fraudulent hedge fund, are able to sue investors who cashed out before the fund failed in 2005, according to The Wall Street Journal.

In response to a survey of members of Generation X—500 people between age 25 and 40—that indicated 24% are hesitant to open an IRA because they don’t have enough money for the minimum investment, Charles Schwab has devised a number of recommendations for how they can save money.

MIAMI-John Bogle, founder and former chief executive of Vanguard, recalled his first speech before The National Investment Company Service Association's Annual Conference & Expo in 1977, when he predicted a shareholder revolution. While that hasn't happened, he told this year's conference last Tuesday, he believes a shift in mindset is, nonetheless, underway.

MIAMI-The economy may be going global, but it's not quite business-without-borders yet, according to panelists at The National Investment Company Service Association's 25th Anniversary Annual Conference & Expo here last week.

MIAMI-Because the threat of a pandemic occurring is real and the question is when it will happen, not if, "companies are legally required to have a business continuity plan in place," said Jim Coppedge, general counsel at AIM Investment Services, during a panel last week at The National Investment Company Service Association's 25th Anniversary Annual Conference & Expo here.

It's been nearly one year since Reserve Management, advisor to The Reserve family of money funds and the Hallmark family of funds, first revealed it had inadvertently allowed both the investment advisory and 12b-1 distribution contracts on the majority of its mutual funds to lapse, in some cases since 1997 (see MME 3/13/06).

A TD Ameritrade survey of 674 investors indicated that half of retail investors see the best returns in 2007 coming from markets outside of the United States, the company's Chief Executive Joe Moglia said during an interview with CNBC.

Lehman Brothers and Fidelity Investments announced last Wednesday that they have linked their electronic trading platforms.

The NASD has fined Raymond James $2.75 million for lax supervision of 1,000 of its producing branch managers between 2000 and 2004. In a related action, NASD permanently barred one of the firm's former branch managers, Donna Vogt, for recommending unsuitable mutual funds and variable annuities to retirees.

Fidelity Gives Johnsons New FMR Board Posts

MIAMI-Index funds beating active managers and mutual fund costs rising are just two of numerous misconceptions about the industry that Paul G. Haaga, Jr., vice chairman of Capital Research and Management, addressed last week in his "Revisiting Conventional Wisdom About Mutual Funds" keynote speech at The National Investment Company Service Association's 25th Anniversary Annual Conference & Expo here.

MIAMI-The best laid battle plans lead nowhere unless the front-line troops buy in.

Gamco Investors has made an offer to the Securities and Exchange Commission to finally settle an investigation begun in 2003 into mutual fund timing, Reuters reports. Gamco indicated in an SEC filing that it has set aside another $3 million in reserve on top of the $12 million it had previously set aside. Gamco said that the $15 million set aside totals 34 cents a share and that the $3 million recently set aside will reduce fourth-quarter profits by 7 cents a share. 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.

New York-based exchange-traded fund provider WisdomTree has launched six new funds on the American Stock Exchange. The group is the first family of funds from the company to be weighted by earnings, rather than traditional, market capitalization. Earlier WisdomTree funds have been dividend-weighted. “We are excited to expand our fund family, as it is our belief that fundamentally weighted ETFs help address the structural flaws inherent to cap-weighted index products,” said WisdomTree Chief Executive Jonathan Steinberg. The six funds include the WisdomTree Total Earnings Fund and the large-cap focused WisdomTree Earnings 500 Fund, which both have expense ratios of 0.28%. The WisdomTree Midcap Earnings Fund, SmallCap Earnings Fund, large-cap oriented Earnings Top 100 Fund and multi-cap Low P/E Fund each have a 0.38% expense ratio. ALPS Distributors will manage distribution of the ETFs, which are among 263 now on the American Stock Exchange.

As the Vietnam stock market continues to surge, waves of hedge funds are starting to pour money into the market, according to The Wall Street Journal. The Vietnam sock market index soared 145% last year, and in less than two months this year, the index is up another 44%. The numbers are still small, even by emerging-market standards, but hedge funds are still interested in the region. “Vietnam finally started attracting hedge fund investors last year,” said Perry Jung at New York-based Auerbach Grayson Co. “They saw the market was up 120 % at one point and wanted to get in.” However, the stock market is showing signs of a bubble, and there are growing concerns that it could pop. Share price valuations are nearing those of the Internet stocks in the 1990s. Client notes from brokerage firms are warning that the Vietnamese government plans to soon impose capital controls “aimed at curtailing potential capital flight in the event of a market crash,” wrote J.P. Morgan. According to a Credit Suisse report, a policy study was submitted to Vietnam’s prime minister offering various ways to cool the stock market. Capital controls under consideration include a rule that foreign money must remain in Vietnam for at least one year and imposing new taxes on foreign exchange transactions, the report stated. The increased investor interest has misrepresented the market somewhat. Popular stocks are trading at more than 50 times their trailing 12-month earnings. Setting up a local stock trading account in Vietnam takes two months, and most hedge funds don’t want to wait. Actually, many have been buying one of the dozen Vietnam-orientated closed-end funds, driving up some premiums well above 50%. Some of the new Vietnam funds have been offered by units of Deutsche Asset Management and J.P. Morgan, but none are available to U.S. retail investors. There are some companies that are interested in “emerging China,” but are waiting to enter the market. “Vietnam’s problem is too little supply and too much demand,” said Arjun Divecha, at GMO Emerging Markets Fund. When the speculation ends, prices could fall hard. “At that point, we would be interested in entering the market,” Divecha 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.

A hedge fund manager in Washington has been charged with defrauding many Maryland residents of millions of dollars after he solicited their money at free lunch seminars and hid losses with phony statements, according to The Washington Post. John Williams violated eight civil statutes of state security laws, Attorney General Douglas F. Gansler said. Williams’ firm’s assets were frozen by Prince George’s County Circuit Court. William met Canadian hedge fund trader Stephen Chesnowitz in an Internet chat room and they became involved in the scheme, according to a court filing by Gansler’s office. The two men lured people through mass mailing advertisements offering a free “gourmet meal” and the opportunity to “earn excellent returns with a guarantee against market risk.” More than 150 people went to the seminars, and Williams collected a total of $9 million. He then transferred the money to Chesnowitz’s hedge funds in Canada and Cayman Islands. Once the money was made, the two invested in unstable investments, including a financial firm that has since become defunct, a bed and breakfast in Canada, and two vintage cars, according to the court filing. Investors were never told about the deals. Investors were able to log on to a website to check on how the hedge funds were doing, and the false statements showed investments were profitable. In one day, April 28, 2006, the hedge fund suffered $626,280 in losses, the filing said. Williams, “knowing the money was gone, continued to take fees” based on phantom returns, the court filing said. In total, Williams paid himself $586,000 for managing the investments. Chesnowitz has not been charged, but officials are looking into his activities. The investigation could be hindered because he is not located in the U.S. 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.

Morningstar announced Thursday that its fourth-quarter earnings rose 35% to $13.6 million, or 29 cents a share, from $10.1 million, or 22 cents a share in the fourth quarter of 2005.