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The NASD has notified Diversified Investors Securities Corp. (DISC), a subsidiary of Diversified Investment Advisors, Inc. (DIA), of a preliminary determination to recommend disciplinary action against it over market timing.

Bank of New York revealed Tuesday that the Securities and Exchange Commission is investigating marketing and distribution costs at its BNY Hamilton mutual fund family. Last fall, BONY revealed in filings that the government and self-regulatory agencies were investigating the bank over its potential failure as a stock transfer agent to find lost shareholders, along with its fund family's relationship to an unnamed fund administrator.

Due to a net loss of $676 million in the fourth quarter, Marsh & McLennan Cos. announced Tuesday it will slash 2,500 more jobs to save $375 million a year, following an earlier downsizing of 3,000 jobs to recognize $400 million in annual savings.

The Securities and Exchange Commission is looking into whether mutual funds do their part to collect shareholders' money from class-action lawsuits, Lori Richards, director of the SEC's compliance inspections and examinations, told Reuters. Principally concerned with the methods investment advisors use to evaluate whether or not to file for a settlement, the Commission could reveal its findings in a month, she said, speaking at a mutual fund conference in Washington.

As it begins to merge its own Nations Funds with the Columbia Funds it acquired through its FleetBoston Financial purchase, Bank of America is eliminating some of the poorly performing funds from Fleet.

The Ontario Securities Commission, Canada's chief regulator, said Monday it has reached a settlement with Franklin Templeton Investments over market timing allegations at some of its mutual funds, according to Reuters.

Janus Capital Group said Monday it plans to sign a fund distribution deal with the private banking arm of J.P. Morgan Chase to increase asset inflows, according to Reuters.

President Bush might be bullish on the idea of Social Security privatization, but a number of Wall Street experts are expressing skepticism over whether returns will live up to expectations.

Amid the furor over the mutual fund trading scandal, three fund industry experts, Mercer Bullard, Jack Bogle and Don Phillips, told Morningstar that the industry needs to embrace several reforms to fix its inherent flaws.

The NASD has fined the former Quick & Reilly, now a member of the Banc of America Investment Services family, $570,000 for directed-brokerage violations. In addition, NASD imposed a $275,000 fine on Piper Jaffray for similar abuses. The Piper Jaffray fine was adjusted to reflect the firm's voluntary disclosure of its wrongdoing, which was uncovered during a self-evaluation.

The financial advisory unit of American Express violated its fiduciary duty to clients by providing secret incentives to its sales force to sell poorly performing in-house mutual funds, New Hampshire regulators allege. American Express Financial Advisors reportedly rewarded its sales staff with higher bonuses, more praise and, in some cases, with free one-year leases on Mercedes-Benz cars, for selling the proprietary funds. The New Hampshire Bureau of Securities Regulation investigated the unit's sales practices between 1999 to 2003 and has asked a hearing officer to impose penalties of up to $17.5 million, including restitution.

Paul Roye, director of the investment management division at the Securities and Exchange Commission, ended nearly a year of speculation on Feb. 18 by announcing that he'll step down as the mutual fund industry's top regulator. The news rekindled a debate, however, over who might replace the mild-mannered Kentuckian and just what his legacy might be.

MIAMI - Chief compliance officers at mutual fund shops are finding out that defining their responsibilities takes a lot of guesswork.

A heightened regulatory environment has forever changed the $8 trillion mutual fund industry, as the fallout from a wave of scandal has had a significant impact on its various operating facets, a reality that has put its member firms at the crossroads.

United States District Judge Andre M. Davis dismissed all remaining civil charges last week against former Bank of America executive Charles Bryceland on mutual fund timing and late trading. Although the Securities and Exchange Commission, NASD and New York Attorney General have never charged Bryceland, he was named and then dropped as a defendant in a number of earlier cases.

Speculation that Marsh & McLennan might spin off its scandal-plagued Putnam Investments unit continues, with a report last week that a sale, merger or management buyout are all possibilities. The fact that MMC has been caught up in an $850 million settlement makes a sale even more likely, because Putnam would probably fetch that amount or even far more. According to one analyst, Putnam accounts for nearly half of MMC's $32 stock value, which could put its price tag as high as $8 billion. However, if management were to buy the firm, it would probably cost between $4 billion and $6 billion, based on traditional valuations of 2% to 3% of assets.

Due to what sources say are conflict of interest issues, Ernst & Young is said to be closing its financial advisory services unit, a move that would eliminate several hundred positions and leave clients scrambling.

Russell Taps Romberger, Highland, Day as Directors

Investors poured $4.5 billion into equity funds during January, more than a $7 billion drop from December, according to Lipper of New York. Domestic stock funds were hit hard, but exchange-traded funds experienced a significant milestone.

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