Special Program Root Tag

In a setback for the Securities and Exchange Commission and a major win for the mutual fund industry, the U.S. Court of Appeals told the SEC yesterday to hold off on its rule that would require all fund boards to be overseen by an independent chairman as of Jan. 16, 2006.

Jefferies Group claims that former trader Kevin Quinn, who it hired specifically to bolster its Fidelity Investment trades, misused his $1.5 million annual travel and expense budget, earmarked specifically to win Fidelity business, The Wall Street Journal reports.

The U.S. Securities and Exchange Commission and NASD have been investigating trading at Fidelity Investments, the world's largest mutual fund company, to find out whether traders skewed their business decisions in return for lavish gifts from certain Wall Street brokers according to an August 8 Reuters report.

Fidelity Investments has just launched a new international small-cap equity fund, designed to provide investors and financial advisers with an opportunity to capitalize on the growth potential of smaller, less-well-known companies in non-U.S. market.

PowerShares Capital Management is starting an exchange-traded fund that blends active management with indexing. The PowerShares Zacks Micro Cap Portfolio follows the Zacks Micro Cap Index, which attempts to enhance the performance of the index by concentrating on particular stocks.

Putnam Investments is in talks with the Securities and Exchange Commission to settle a problem with performance fees. In February of 2004, Putnam revealed that the SEC raised questions regarding performance fees in the Putnam Research Fund.

Discount broker E-Trade Financial announced yesterday that it would acquire Massachusetts-based asset manager Kobren Insight Management for an undisclosed amount.

Northern Trust said Tuesday that it had hired Michael Blake to be a vice president of business development within its global fund services unit. Blake is to be based in Chicago and develop business for the group, which serves investment managers, fund sponsors and other entities that manage money in-house. Before joining Northern Trust, Blake was the director of financial markets at Business Logic Corp. in Chicago, where he was responsible for sales and marketing of financial planning and managed account software to institutional clients. Previously, he was a manager in the compensation and benefits practice at Grant Thornton LLP in Chicago and an officer at Northern Trust.

Janus Chief Operating Officer Girard Miller will resign as of Jan. 3, Janus announced yesterday, but even so, Chief Financial Officer David Martin will handle most of Miller's responsibilities over the next several months.

Former Prudential Securities broker Skifter Ajro pled guilty yesterday to processing $1.3 billion worth of market-timing trades in mutual funds on behalf of hedge fund clients.

Oppenheimer Holdings indicated in an SEC filing yesterday that NASD is set to recommend action against its Chairman and Chief Executive Officer Albert G. Lowenthal for failures related to breakpoints.

Oppenheimer Funds has recently put a proposal on the table to create an 11-member board for 33 of its 60 mutual funds as well as four hedge funds managed by its Tremont Capital Management unit. The firm notified shareholders of the plan in a proxy filing late last month and is asking them to vote on the proposal, according to Dow Jones Newswire.

Vanguard Group, the nation's second-largest mutual-fund company, has decided to warm up to full-service brokerages, an old rival of the company, in an attempt to reverse its falling behind in the race to grab investors for exchange-traded funds (ETFs), the Associated Press reports.

Principal Financial Group, one of the biggest sellers of 401(k) retirement plans in the United States, is setting up shop in China in a joint venture with China Construction Bank. Headquartered in Beijing, CCB-Principal Asset Management will market mutual funds in the People's Republic of China and be 65% owned by China Construction, 25% by Principal and 10% by China Huadian Group.

The discount brokerage industry shrunk further yesterday with the announcement that online giant E-Trade Financial would acquire rival HarrisDirect in a $700 million deal.

The NASD has issued the controversial Notice to Members regarding equity index annuities (EIAs) that has sent ripples through the annuity and brokerage industries over the past several months. Notice to Members 05-50, Member Responsibilities for Supervising Sales of Unregistered Equity-Indexed Annuities, advises broker/dealers to consider treating all EIAs like securities.

In the wake of the London subway and bus bombings, top concerns among affluent Americans have shifted from the economy to terrorism, safety, and security, according to a survey to be released today.

Two former Citigroup executives, the CEO and the CFO of the mutual fund unit, Citigroup Asset Management, were accused yesterday of kicking back tens of millions of dollars in mutual fund savings to the company's transfer agent, rather than to investors.

The people T. Rowe Price's Media and Telecommunications Fund have been doing their own accounting private investigating and it's proved to a lucrative business.

Private equity firms and hedge funds are finally learning to live together, despite how wary the former is over how the latter is encroaching on its turf, an Aug. 5 report from Reuters indicates.