Special Program Root Tag

Two leading mutual fund companies own a sizable stake in the troubled Denver-based Janus Capital Group, according to MarketWatch.com. As of Dec. 31, 2004, Fidelity Investments owned 9.4% of Janus, or 22.1 million of 236.3 million total shares, and Ariel Capital Management owned 15% of Janus, or 35.5 million shares.

If the Independent Directors Council has its way, the transformation of mutual fund boards will go well beyond the Securities and Exchange Commission's independent chairman rule, which takes effect Jan. 16, 2006.

Bear Stearns said that the Securities and Exchange Commission is considering a civil injunctive action against it stemming from investigations into mutual fund market timing and late trading, according to MarketWatch.com. The Commission is also considering issuing a cease and desist order against the company and its Bear Stearns Securities Corp. unit.

More than 40% of U.S. households, or 40 million households, owned at least one IRA in 2004, off just slightly from the 41.4% of 2003, an annual ownership study from the Investment Company Institute reveals. That number, however, is somewhat higher versus the 39.5% of 2002 and the 39.7% of 2000 and 2001.

Assets in 529 college savings plans swelled to an estimated $52.3 billion for the fourth quarter of 2004, up 15.8% from an estimated $45.1 billion at the end of the third quarter of 2004. The data was reported by Financial Research Corp. (FRC) and released Monday by the College Savings Foundation (CSF).

Putnam Investments announced the retirement of Steve Oristaglio, head of investments, and said it has promoted Kevin Cronin to that postition.

China's mutual fund industry may not be welcoming of foreign fund companies, according to a column in Financial Times by Mark Konyn, chief executive of Allianz Dresdner Asset Management in Hong Kong.

In an arbitration settlement, Morgan Stanley paid $19,000 to an investor even after he made threatening remarks to one of the firm's brokers, according to Dow Jones Newswires.

Owing to an indemnity letter it provided to its U.S. broker, A.G. Edwards, London-based hedge fund manager Headstart Asset Management reportedly may have to pay up for losses caused to U.S. mutual fund shareholders resulting from nearly $2 billion of market-timing trades.

Peter Scannell, the whistleblower who helped take down Putnam Investments, has resurfaced, having secured a job with the securities regulator who first charged the mutual fund company with fraud. Scannell, a former employee at Putnam's call center in Quincy, Mass., initially grabbed headlines when he told William Galvin, Massachusetts secretary of the commonwealth, that Putnam turned a blind eye as more than a dozen union members with retirement accounts at Putnam market timed its funds.

In a Jan. 31 story about internal wholesalers, 13-year-old Investors Capital Corp. was incorrectly identified. Also, portfolio manager Tom Cameron helped launch the Eastern Point Advisors Rising Dividend Growth Fund in 2004. The firm's first fund, the Eastern Point Advisors Capital Appreciation Fund, launched in 1999.

Accessor Capital Management of Seattle is now the second firm the Securities and Exchange Commission has targeted for miscalculating its mutual fund performance-based management fees. In addition, several other investment managers that have sub-advised the Accessor Capital funds may also be implicated if the SEC follows through on its threats of regulatory action.

Federal regulators on Wednesday filed civil fraud charges against two former FleetBoston Financial executives, alleging the duo allowed preferred customers to engage in abusive mutual-fund trading practices at the expense of its long-term fund shareholders.

Morningstar said in a recent regulatory filing it has chosen a ticker symbol for its initial public offering, suggesting that it might finally be ready to bring shares to market after months of delays.

In news that surprised even the most astute investment business insiders, Eaton Vance has been crowned the No. 1 publicly traded stock in the last 25 years. According to FactSet Research Systems, Eaton Vance's annualized return of 32% since 1979 put the company ahead of such Wall Street princes as Warren Buffett's Berkshire Hathaway and Wal-Mart. Eaton Vance leadership learned of the milestone during a recent Merrill Lynch conference. "There were big smiles on our faces when we saw that," said Eaton Vance Chairman James Hawkes. "It was one of those Holy Batman' moments."

Congressional Democrats from Massachusetts, a state that many leading money management firms call home, are unifying in opposition to the Bush Administration's proposal to route a portion of Social Security into mutual funds. Although they recognize the implications the Bush plan might have for hometown fund giants like Fidelity Investments and Putnam Investments, at least eight of the 12-member delegation doubt the president's claims that Social Security is in crisis and are concerned over diluting a safety net on which many of their constituents rely. "Senior citizens' needs are more important than parochial interests," said Rep. Michael Capuano.

Hancock Names Knox VP, Chief Compliance Officer

St. Paul Travelers Cos., Minnesota's largest insurer and the 13th largest in the U.S., wants to divest its majority stake in Nuveen Investments. But unlike other major financial companies like Citigroup and American Express that are now hoping to shed the non-core businesses they added during the corporate acquisition feast of the 1990s, St. Paul Travelers will begrudgingly part with what is easily its most lucrative unit.

While the mutual fund industry wrangles with the upcoming independent chairman rule, TIAA-CREF has commissioned a study that will look at two other fund governance issues that have escaped regulators' attention: whether ownership of a fund by directors improves performance and whether revenue sharing lowers it.

An informal poll by Diversified Management Resources (DMR) of Belmont, Mass., shows that few mutual fund executives, only 34%, believe that all fund boards should have independent chairmen. Investment professionals are also evenly divided over whether independent chairmen should be required for all mutual fund boards or just for those funds whose managers have allegedly violated compliance rules. Another 34% said that only funds whose managers have violated compliance rules should have independent chairmen. The remaining 32% said that the change should not be instituted.