Special Program Root Tag

MarketWatch columnist Chuck Jaffe portrays the $75,000 former Putnam CEO Lawrence Lasser paid to the Securities and Exchange Commission for permitting revenue sharing as a “wimpy, one-fingered slap on the wrist.” Given the fact that Lasser got a $78 million severance package and the firm paid his legal expenses, $75,000 is a meaningless drop in the bucket, Jaffe says. As long as regulators fail to properly punish wrongdoers, he predicts, scandals will continue to plague the industry.

Steven Markovitz, a former trader at hedge fund Millennium Partners, was sentenced at a Tuesday hearing before New York State Supreme Court Justice James Yates to five years probation. Markowitz must also perform 300 hours of community service. He had faced up to four years behind bars.

Putnam shareholders, in the face of a reported pending acquisition of the company, voted Thursday to keep the Putnam High Income Securities, Putnam Master Income Trust and Putnam Premiere Income Trust closed. The funds’ governing documents state that if the funds’ shares trade below a certain proportion of the net asset vale during the last 12 weeks of the fiscal year, shareholders must be asked to vote to open it. Trustees of the funds recommended that they remain closed, as their status offers potential advantages. Fewer than 14% of shareholders voted against the recommendation. Shareholders also re-elected all 12 trustees, according to the statement issued by Putnam.

The days of defined benefit plans continue to end at many companies, and Miami-based truck leasing company Ryder Systems is the latest to freeze its pension plan for employees, according to The Miami Herald. The plan will affect about 9,400 of Ryder’s 27,000 employees. The company is shifting employees to a 401(k) savings plan. Employees with fewer than 20 years with the company will be moved to the new program and will not lose pension benefits already earned. Ryder will automatically deposit 3% of an employee’s pay into the 401(k) plan. A financial statement for 2005 showed that Ryder estimated contributions for its pension plan to reach around $115 million over the next five years. 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 New Canaan, Conn.-based hedge fund is hoping to attract observant Muslim investors who have, until now, avoided alternative investments whose tactics sometimes contradict teachings of the Q’ran, according to The Stamford Advocate. Shariah Capital Management, which derives its name from the term for Muslim law, seeks to tap into the trillion dollars of liquid wealth floating through the oil-wealthy Persian Gulf region by promoting funds that help their investors win big, without violating the laws of the Q’ran. The funds managing director, Joseph Gau, estimated that Gulf-region investors have about $350 billion and $400 billion worth seeking Islam-oriented financial opportunities. His company has been working with Islamic scholars for more than six years to get the right product mix. Southeast Asia and the Indian subcontinent offer potential for billions more of investment. When it comes to hedge funds, one problem is that Shariah prohibits selling something one does not own. Observant Muslims sometimes consider short-selling stocks as a violation of that rule. Likewise, the Q’ran prohibits paying and receiving interest, and undue speculation. Sheikh Yusuf Talal DeLorenzo helps put Shariah’s client’s consciences at ease as chief Shariah officer. As chairman of the Dow Jones Islamic Index and considered by many the premier Islamic finance scholar in the country, he helps engineer the firm’s products. Shariah Capital often works as a sub-advisor to other hedge funds or funds-of-funds. Often these funds create special, separately managed prime brokerage agreements through Barclays Bank, the terms of which include no provisions for interest or other forbidden elements. “We look at their portfolios and look at equity positions and we will be able to tell them in fairly short order if their strategy can be Shariah-compliant,” said Gau. 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.

TD Ameritrade Holding Corp., an online Omaha, Neb.-based brokerage, is aiming to launch five lifecycle exchange-traded-funds to seek new sources of revenue, according to Dow Jones. According to a Securities and Exchange Commission regulatory document, New York fund firm XShares Advisors, a firm with a number of ETFs pending before the SEC, will serve as the new funds’ advisor, while TD Ameritrade and Bank of New York will be sub-advisors. The effort is a joint venture. “It’s their product,” says Jeffrey Feldman, founder of XShares Group, the parent of XShares. “We are providing infrastructure and marketing capability.” The ETFs will be called “Independence Shares” and are lifecycle funds, which adjust their holdings, based on an investor’s proximity to retirement or another target date. The ETFs will be a first for Ameritrade, but not the first time the company took advantage of the popularity of ETFs. In October 2004, the firm launched Amerivest, an online service that offers investors advice on which ETFs to buy for a flat annual fee of 0.35% to 0.8% of assets. 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.

Brokers with large books of business who switch firms will be under more scrutiny than ever from the New York Stock Exchange regulation arm this year, according to Dow Jones. Grace Vogel, executive vice president of member regulation for NYSE regulation, said her staff will be looking this year at registered representatives who change firms to make sure they are not hurting customers in the process. She said she has seen instances where a broker gets a “lucrative pay package” at a new firm. Before the broker leaves, she said, he persuades his customers to liquidate their holdings in funds that aren’t offered at the new firm—and then once he makes the switch puts the clients in similar products. Customers can end up paying fees and taxes to change to products that were no better or different then the ones they left, Vogel said. Also, a concern is brokers running up commissions before they move to get higher compensation packages, Vogel said. Based on U-4s and U-5s, disclosure documents that must be updated when brokers change forms, “We’re going to select a group of brokers and follow their books to see if they’re acting appropriately.” However, it is fairly common for brokers to take their clients out of non-transferable products before taking them to a new firm, and it’s not necessarily a problem, recruiters say. “I don’t think anyone’s doing anything under the table here,” said Alan Reed, a recruiter with Michael King Associates, saying investors can choose to go with a broker or can stay at their current firms if they are happy with the funds they are in. “It’s all out in open.” Carri Degenhardt-Burke, a recruiter who works with brokers, said the problem isn’t that brokers take their clients out of proprietary funds when they want to change firms; it is that firms offer non-transferable funds at all. “The firms themselves are the ones creating policies to virtually keep clients there,” she 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.

Three Merrill Lynch brokers who were booted from the firm amid market-timing charges in 2003 are now under investigation by the New York Stock Exchange, according to The Wall Street Journal. Known as the CBS Group, the triumvirate—Christopher Chung, Kevin Brunnock and William Savino—were accused of helping hedge fund clients improperly trade mutual funds. The team joined Merrill in January 2002, after working together in the Paramus, N.J., office of UBS. This month, the NYSE fined ex-UBS branch manager John Borgese $50,000for failing to supervise his three charges’ market-timing practices in 2001. All three brokers lost their licenses in New Jersey. Susan Necheles, who is representing the CBS group, did not return calls seeking comment. UBS likewise declined to comment. In 2005, the NYSE fined Merrill Lynch $13.5 million for failure to stop the CBS group’s trading. The exchange and New Jersey Bureau of Securities levied $49.5 million in fines on UBS. Merrill was also ordered to pay the three brokers $15 million for sullying their reputations by the NYSE arbitration panel. That case is pending appeal in the New York State courts. 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.

Interactive mutual fund disclosure may be a step closer to a reality. The Investment Company Institute issued a draft of taxonomy for eXtensible Business Reporting Language (XBRL) data tagging, which will be on the ICI's website for public review for 45 days.

After the fight for the right to remain unregistered, only about 10% of those hedge fund advisors that signed up with the Securities and Exchange Commission before last year's Feb.1 deadline have opted to withdraw, according to data from the federal regulator.

As the unified managed account business rapidly develops, many firms are recognizing the need to offer UMAs to clients. Once the decision is made to introduce a UMA, sponsor firms then begin grappling with whether to hire an overlay portfolio management company, allow portfolio managers to run their funds independently, commonly known as passive management, or use a hybrid approach.

The newest batch of index-based products aren't your father's plain-vanilla index fund that passively tracks a well-known equity index.

Lawrence Lasser, the former chief executive officer of Putnam Investments, agreed to pay $75,000 to settle charges by the Securities and Exchange Commission he authorized the company to make shelf-space payments to 80 brokerage firms from 2000 to 2003 without revealing this to the board of directors. Twenty of these brokers were paid in cash, the remaining via directed brokerage agreements.

As promised, the Securities and Exchange Commission has issued an analysis of the effects of independent directors on mutual funds, but its two reports undermine its proposed rule that would require 75% of a fund's board, including the chairman, to be independent.

Illinois has selected OppenheimerFunds as program manager for its 529 college savings plan, the Illinois Bright Start College Savings Program. As such, OppenheimerFunds will act as investment manager, administrator and distributor of the $2 billion program.

Former Labor Official Combs Joins Vanguard

NEW YORK-The market isn't likely to deliver a banner year in 2007 as it did last year, but investors can take advantage of certain sectors that are poised for a turnaround.

NEW YORK-As the economy slows, as expected in 2007, Eaton Vance wants investors to think big.

In spite of the recent blowups of a number of well-known hedge funds, these investment vehicles will continue to grow and be a popular investment choice this year, according to Deutsche Bank’s alternative investment survey.

Sun Life Financial has reached an agreement to acquire the U.S. benefits business of Genworth Financial for $650 million. It provides group life, disability, medical stop-loss and dental insurance to 2.9 million people at 32,000 organizations.