Special Program Root Tag

Speaking before the Senate Banking Committee Wednesday, SEC Chairman William Donaldson vowed to adopt further mutual fund reforms, most notably in the areas of trading costs, soft dollars, 12b-1 fees and fund fee and trading cost disclosure.

AIG-Huatai Fund Management Co. Ltd., a Shanghai-based joint venture between AIG Global Investment Corp. and Huatai Securities Co., sold its first mutual fund in China on Monday, according to China Daily.

Lipper announced Tuesday that it has entered into an agreement to purchase HedgeWorld and the TASS Research database business, two highly regarded hedge fund research tools.

The national office of the AFL-CIO has persuaded money manager Waddell & Reed to join Edward Jones in withdrawing from a lobby group that supports President Bush's proposal to reform Social Security through private accounts, and now the organized labor giant has set its sights on Charles Schwab.

Bank of America Corp. will outsource back-office operations for $224 billion of assets to Boston-based State Street Corp. and Boston Financial Data Services, a joint venture of State Street and DST Systems.

Merrill Lynch has reached a $13.5 million joint settlement with state regulators and the New York Stock Exchange over charges that it failed to supervise a group of financial advisers who engaged in abusive market timing of the firm's mutual funds.

Putnam Investments announced investment management changes Friday in its Putnam Voyager Fund and Putnam Growth Opportunities Fund.

Fidelity Investments announced two moves last week that are expected to help the company re-capture market share, according to Morningstar columnist Russel Kinnel. The Boston-based fund giant said it will make its index-fund fee cuts permanent. It also said it would appoint two managers to run independent portions of its Mid-Cap Stock portfolio.

Shareholders should be careful before assuming that mutual fund mergers will necessarily translate into higher cost savings, some research analysts told The Associated Press.

Alan Greenspan foresees a surge in the U.S. savings rate, which could be good news for the mutual fund industry, but the Federal Reserve chairman's prediction isn't finding a lot of support among other leading economists and academics, a Bloomberg news report suggests.

In moving from regulator to in-house counsel at Bank of America, Cynthia Fornelli is navigating the very rigorous regulatory environment she helped to create at the Securities and Exchange Commission.

Securities regulators in Illinois are pressuring Bear Stearns to turn over documents that contain proof of market-timing improprieties, it was reported last week. Illinois sent a notice to the firm on Feb. 10 asking its executives to appear before a hearing on April 6 to fess up as to why they failed to respond to a subpoena the month before. The state threatened Bear with a penalty and/or revocation of its state license.

On Sept. 3, 2003, Canary Capital came clean over its market-timing and late-trading abuses. Now, nineteen months, four days and billions of dollars in penalties later, regulators continue to uncover malfeasance in a scandal that never seems to end.

No cocktail party conversation about mutual fund reform would be complete without a discussion of the future of rule 12b-1.

The Securities and Exchange Commission Thursday approved a new rule to combat market timing that would leave the decision to impose redemption fees on mutual funds up to the board of directors and allow funds to hold intermediaries more accountable for abusive trading.

MIAMI - Having put the pain of a pervasive trading scandal behind it, Alliance Capital Management and its mutual fund subsidiary Alliance Bernstein are focused on carving out market share and winning new clients by retooling their distribution strategy. "We're no longer known for hot product and high fees," said Bob Hausler, director of marketing communications at AllianceBernstein, speaking at a recent conference sponsored by the National Company Service Association. "We're a different firm than we were 14 months ago."

Led by favorable stock market activity and a reputation still unmarked by the scandal, Fidelity Investments witnessed a 23% surge in net income in 2004. Profits at Boston-based Fidelity rose to $1.1 billion in 2004, versus $908 million in 2003, the firm's third-best year ever. Fidelity's average assets under management in 2004 grew to $1.0 trillion, an 18% hike compared to 2003. However, Jim Lovell, editor of Fidelity Investor, noted that probably 75% of the increase in assets was due to market activity.

Amid the ongoing furor over the mutual fund trading scandal, three fund luminaries, , Jack Bogle, Mercer Bullard and Don Phillips, weighed in with Morningstar on what reforms the industry needs to embrace to fix its inherent flaws.

Even though revenue-sharing payments come out of a fund's own coffers, the common practice hurts investors because of the bias it creates, attests Morningstar columnist Eric Jacobson. "The reality is that fund companies pay up for precious access to brokers, and those brokers are almost always limited to selling funds that have paid up," Jacobson said. For instance, he points out that Merrill Lynch notes that "funds that do not enter into arrangements with Merrill Lynch are generally not offered to clients."

Fidelity Names Strickland President of Canadian Firm