Special Program Root Tag

Disclosure is the order of the day. The Securities and Exchange Commission is putting in place a rule requiring mutual fund companies to start disclosing how they structure portfolio managers' compensation and to indicate managers' investments in the funds they oversee, The Wall Street Journal reports.

In news that surprised even the most astute investment business insiders, the Boston-based mutual fund company Eaton Vance has been crowned the No. 1 publicly traded stock in the last 25 years.

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 for ripping off investors, according to The Boston Globe.

Marsh & McLennan Cos., which agreed to pay $850 million to settle charges of bid-rigging brought against it by New York regulators, may fork over a lot less than that amount, thanks to a tax deduction that could shave hundreds of millions of dollars from the headline figure, The Wall Street Journal reports.

Massachusetts Secretary of the Commonwealth William Galvin last Tuesday sued A.G. Edwards for allowing at least one of its representatives to market time mutual funds on behalf of two offshore hedge funds. One of the fund's market-timing trades was nearly $2 billion, according to the complaint.

An independent consultant said that rapid in-and-out trading in mutual funds at Putnam Investments cost investors as much as $100 million, a figure that is 10 times the previous estimate of damages.

Separately managed accounts witnessed strong growth again in 2004, as assets under management grew by 15.9% to $576.1 billion, the Money Management Institute reported. MMI predicts that number will reach $1.3 trillion by 2008, primarily due to IRA rollovers, which comprised 25% of the industry's $30 billion of net flows in 2003 and are expected to reach 40% by 2008.

Marsh & McLennan, the nation's largest insurance broker, last week agreed to an $850 million settlement with New York Attorney General Eliot Spitzer for conspiring to rig insurance bids and steer business to preferred insurers in exchange for lucrative kickbacks.

The Securities and Exchange Commission is considering point-of-sale disclosure forms that would reveal to investors any revenue sharing or conflicts of interest between broker/agents and mutual fund companies. While fund executives may worry that disclosure will deal a serious blow to sales, industry insiders are skeptical of the forms' value and say revenue sharing is far too critical to the industry for even the most effective disclosure to put an end to it.

The Massachusetts state pension board announced last week that it will not invest any new money in Fidelity Investments, reprimanding the world's largest fund company for the manner in which it has responded to the board's questions regarding a federal investigation of its trading desk.

The Securities and Exchange Commission is drafting a proposal that would offer mutual fund investors more information on how much their funds spend to buy and sell securities. Working in tandem with the NASD, the proposal would push for a disclosure of a five-year history of spending on commissions, in both dollar terms and as a percentage of a fund's net asset value, allowing for easy comparison across funds. It will also urge funds to report the average amount they spend on commissions for each share traded.

Citigroup has announced that the Securities and Exchange Commission may recommend a civil injunction and/or administrative proceedings against Citigroup Asset Management, Citicorp Trust Bank, former asset management unit CEO Thomas Jones and three other people.

Thwaites Joins National Life To Head Mutual Fund Unit

Before President Bush could even fire the first official volleys of his campaign to reform Social Security during last week's State of the Union, AARP, the nation's leading defender of the fund, was mobilizing its troops in vigorous opposition. Other groups with deep campaign pockets, like the Republican National Committee and the liberal group MoveOn.org, were also lining up in formation.

The Securities and Exchange Commission released monetary distribution details for the sweeping $1.4 billion research settlement last week, indicating how mutual fund advisors can recoup losses in companies that Wall Street analysts unabashedly touted, including AT&T, Global Crossing and WorldCom.

Europe's mutual fund industry grew 14.5% in 2004 as continued improvement in equity markets boosted assets under management to 3.54 million euros, according to a Reuters report citing Lipper.

Industry experts expect that if the government goes ahead with its plan to privatize Social Security, only the very largest index fund managers are likely to get a piece of the action, The Wall Street Journal reports.

Further escalating an ongoing price war among brokers, San Francisco-based Charles Schwab will slash online stock-trading commissions by 35% for small investors.

Federated Investors reported an increase in fourth-quarter earnings but said the results were preliminary because of ongoing settlements with regulators that are likely to hurt profits.

The hedge fund industry saw billions of dollars of new money last year, but more than 350 hedge funds shut down primarily because of poor performances by managers, according to data released by the Hennessee Group.