Special Program Root Tag

In a rather unusual case, the Securities and Exchange Commission sanctioned Kelmoore Investment Co. of Palo Alto, Calif., and fined the company $100,000 for misleading disclosures regarding the investment advisory fees it charged on five proprietary mutual funds, two of which were only available within variable annuity contracts and were liquidated at the end of 2005 due to low asset levels.

A merger of the Catholic Equity Fund, run by Catholic Financial Services Corp. and the Ave Maria Rising Dividend Fund, run by Schwartz Investment Counsel was announced last week. The deal is expected to close in March.

Both retail and institutional-class shares increased, with total asset rising $10.19 billion to $2.39 trillion. Retail shares increased $1.68 billion to $983.5 billion, with investors, who have an eye on tax day, favoring tax-exempt classes. Of the 881 retail-class shares available, the 307 tax-exempt shares increased $1.92 billion to $231.29 billion, while the 574 taxable shared dropped by $241.2 million to $752.22 billion. Meanwhile, institutional investors seemed less preoccupied with tax status. Of the 1,146 retail class shares available, the 896 taxably shares attracted $13.52 billion more, for a total of $1.268 trillion, while the 250 tax-exempt shares dipped by $5.01 billion to $139.89 billion.

Zurich-based UBS announced Friday it had bought the $3.21 billion Indian mutual fund arm of London-based Standard Charter PLC. The $119 million deal calls for the Swiss bank to forge a distribution alliance with the British bank, according to the Associated Press. While Standard Charter will provide distribution to UBS throughout Asia, the Middle East and Africa, Standard Charter will gain use of UBS Investment Bank products. The Acquisition adds 16 funds to UBS’s suite, including 10 fixed income, four equity and two asset allocation funds. With 60 employees, Standard Chartered Asset Management controls about 4% of the Indian marketplace. Terms of the agreement are not yet final. “As the regulatory environment continues to develop, domestic investors will—as has been the case in other markets—increasingly look to global financial service firms to provide innovative investment solutions,” said UBS Global Asset Management Chief Executive John Fraser. 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.

In a somewhat controversial move, Illinois’ state Teachers Retirement System will invest nearly $1 billion in hedge funds over the next three years, according to the Chicago Tribune. The $39 billion system is underfunded, involved in a kickback scandal and facing financial woes that include having only 62% of the money needed to meet its projected costs. The TRS has not chosen its hedge fund managers yet, and some observers predict it will have a hard time finding the best ones, as accepting the money of public pensions can expose hedge funds to Freedom of Information Act requests from meddlesome competitors. “Successful hedge fund operators can basically pick and choose who they want as clients,” said Howard Pohl, principal at Chicago’s Becker, Burke Associates financial advisers. “If they have to disclose their investment portfolio, the hedge fund guy says, ‘I don’t need you.’” The system will limit its exposure to 2.5% of assets, which is lower than the 1% recommended by outside consultants to the system. However, the $15 billion State University Retirement System for Illinois’ higher education employees has steered clear, mostly because of difficulties in tracking hedge fund trading activity, said Dan Slack, executive director. “When they tell us to ‘Just trust us,’” he said, “that makes us as a public fund very nervous.” 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.

Christopher Dodds, chief financial officer of brokerage giant Charles Schwab & Co., will be leaving his post after eight years, according to MarketWatch. Dodds will step down as CFO at the annual company meeting May 18. Joseph Martinetto, 45, currently Schwab’s senior vice president and treasurer, will succeed Dodds, 47. Dodds stated he wanted to spend more time with his two sons, aged 14 and 16, and to exit Schwab on a high note. “Many others have held on too long and it’s a rare quality to move from a position of strength, he said. Additionally, Dodds has stated he will pursue philanthropic opportunities. 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 claims she is too ill to take the stand, Concetta Donovan, mother of former Fidelity Investments trader David Donovan, Jr., will testify about trades made in her account that mirrored those of the mutual fund company’s, according to Dow Jones. Of particular interest to the Securities and Exchange Commission are shares of Covad Communications Group, a copper semi-conductor manufacturer, which the elder Donavan appeared to purchase in 2003, at the same time as the Boston-based brokerage house. Concetta Donovan, 68, had said she was too ill to take the stand. Her son left Fidelity in 2004. A spokesman for the trader could not be reached for comment. Last month a spokesman said that David Donovan “never took any actions that violated company policies and procedures. 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.

Franklin Resources reported that its earnings for its first fiscal quarter ended Dec. 31 rose 34% to $426.8 million from $318 million in 2005.

Bill Miller, the celebrated manager of the Legg Mason Value Trust Fund, which beat the S&P 500 for 15 years straight until last year, issued a report to shareholders acknowledging “mistakes,” The Baltimore Sun reports. Most notably, he regretted not investing in energy in 2003 when it was cheap and holding too few stocks.

Janus Capital Group reported Thursday that its fourth-quarter profits rose 249% to $37.7 million on revenue of $241.2 million.

Henry Blodgett—the former Merrill Lynch analyst who the SEC fined $4 million and banned from the brokerage industry for having touted the investment bank’s technology clients—is back with a book warning investors about ruses in the industry, Bloomberg reports.

Two mangers of HMC International, a defunct hedge fund headquartered in Montvale, N.J., have agreed to pay $4.6 million after charges that they bilked investors to buy cars and trips, according to the Securities and Exchange Commission.

Despite industry support of a proposed rule raising the requisite assets investors need to buy into hedge funds, the Securities and Exchange Commission is now questioning whether more regulation may be needed, according to Bloomberg.

Franklin Templeton has invested $40 million to build a back-office operations company in India, Reuters reports. The company, Franklin Templeton International Services (India), which began operations on Tuesday and has the capacity to employ 1,800, will support the firm’s operations and technology throughout the world.

DST Systems’ fourth-quarter profits rose 60% to $81 million, up from $50.7 million in the comparable quarter of 2005.

Well Real Estate Funds, in partnership with Dow Jones Indexes and Wilshire Associates, has launched the first fund tied to the Dow Jones Wilshire Global Real Estate Securities Index, which debuted in March 2006. The fund is called the Wells Dow Jones Wilshire Global RESI Fund.

The Depository Trust & Clearing Corp. on Wednesday announced it had significantly reduced the fees it charges for networking shareholder account information between mutual funds and broker/dealers and other distributors.

Public entities such as state and local governments have long put pressure in the companies they have invested in through their pension plans—and quite successfully. For one, many have successfully forced the boards of companies to allow for separate meetings of independent directors.

Fewer Americans with household net worth of $5 million or more, excluding their residence, defined as the ultra-high-net-worth, owned hedge funds last year, The Wall Street Journal reports.

Oppenheimer Asset Management is the latest company to jump on the bandwagon of offering unified managed accounts to clients, and to launch its UMA offering, the company recently partnered with Placemark Investments.