Special Program Root Tag

It looks like VARDS' move to Morningstar is truly its last, but this time it loses its founder and most of its staff.

Paul Roye, former top mutual fund regulator at the Securities and Exchange Commission ended months of speculation last week by announcing that he's going to work for mutual fund giant Capital Research & Management.

Integrity Mutual Funds, a Minot, Tenn.-based mutual fund and financial services company, has launched a new free cash flow fund, the Integrity Growth & Income Fund.

Vanguard Group's Extended Market Index Fund will change its target benchmark from the existing Dow Jones Wilshire 4500 to the Standard & Poor's Completion Index.

The NASD has reached a settlement with Waddell & Reed over allegations that the Shawnee Mission, Kan.-based money manager profited by illegally switching the variable annuities of more than 5,000 customers.

Assets in the hedge fund industry swelled to $1 trillion in the first quarter, although demand for the high-return, loosely regulated investment vehicles remained at 2004 levels, according to a report released by Hedge Fund Research.

Boston fund giant Fidelity Investments has announced a major restructuring that includes replacing Abigail Johnson, the chairman's daughter, with a committee to run its money management arm. Johnson will become president of Fidelity's Employer Services Company, which provides retirement, benefits and human resources services to companies. Johnson, whose family controls the privately held company, was promoted four years ago to run the money management division and has long been seen as her father's successor. Robert Reynolds, Fidelity's vice chairman and COO, will chair a committee to oversee the company's mutual fund unit in addition to his current responsibilities.

The financial services industry is facing a test, in the form of 78 million retiring Baby Boomers. Every company wants to pass with flying colors, but providing retirement income is a different proposition from planning for retirement. Mutual fund complexes, insurance companies, banks, institutional money managers and broker/dealers all offer competing products and services: individual securities, mutual funds, separately managed accounts, hedge funds, annuities, life insurance, long-term care insurance and banking.

In its study of strategies to reach the retirement market, LIMRA International of Windsor, Conn., interviewed 28 companies, including mutual funds, insurers, banks and distributors, about their own strategies and the competition. Fidelity Investments of Boston was cited as the competitor with the most potent program right now (see sidebar pg. 38). After the Fidelity, the following companies, listed in alphabetical order, were mentioned as having strong strategies.

Just as swiftly as the mutual fund scandal cleaned house among fund advisor C-suites, a new trio of top chiefs have emerged as the triumphant triumvirate.

Nearly two years after the Spitzer probe into mutual funds began, MME thought it wise to ask leading executive and legal minds the begging question: Have the regulators gone into regulation overload and is Spitzer killing capitalism?

Let's just raise a question still unanswered after these past two scandalous years.

SCOTTSDALE, Ariz. - Despite the lack of a hard-and-fast rule regarding e-mail retention, mutual funds are hard-pressed to get their arms around electronic archiving, a potentially explosive compliance issue that has examiners licking their chops.

Is there ever such a thing as closure when it comes to scandals? Maybe a better question is, do financial services executives become increasingly diffident about regulatory matters as the list of offenders grows longer and the severity of the infractions appears to wane?

Photos by Matthew Atwan

Consumer advocacy groups and the national media have accused the Investment Company Institute of failing shareholders by focusing too heavily on the investment advisors on whom they depend for fees. Recently, in light of the continuing mutual fund trading and sales abuse scandal, they've again levied this unfair charge.

By George Wilbanks

By Robert Goldberg

ORLANDO, Fla. - Are you going to be paying for shelf space in the future?

Market timing. The mutual fund industry has not heard the end of this phrase, ever since New York Attorney General Eliot Spitzer, in 2003, unearthed shady trading practices through which fund companies allowed some investors to rapidly trade in and out of funds. The practice, commonly known as market timing, raises expenses for the fund and hurts long-term shareholders.