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Regulators are reportedly turning their attention toward J.P. Morgan Chase for its role in facilitating improper trades by Canary Capital Partners, the hedge fund that touched off the mutual fund trading scandal. The Securities and Exchange Commission is questioning whether J.P. Morgan met its obligations to police its client's activities after extending up to $150 million in credit to the hedge fund. Officials from J.P. Morgan's legal defense team at Davis Polk & Wardwell noted in an internal memo that their client was oblivious to Canary's misconduct, but SEC officials are building a case stating ignorance is no defense.

The Internal Revenue Service has just issued guidance on a rule that has been on the books since 2001 to prevent employers from liquidating 401(k) rollover accounts with values between $1,000 and $5,000.

The Securities and Exchange Commission has requested information from Warren Buffet's General Re about the sale of products to generate steadier earnings. The SEC is interested in a type of reinsurance known as a finite loan, which comprised 20%, or $10 billion, of General Re's insurance reserves for 2003. Used properly, insurers will make finite loans to other insurers in exchange for premiums. But critics say that some insurers set the premiums to be paid at a later date to smooth earnings, an accounting violation.

American Century Adds Two Independent Chairmen

The use of customer relationship management (CRM) technology and systems in the fund industry continues to evolve. CRM applications have gone from virtual obscurity within the investment management industry to become standard among sales and marketing departments over the past several years.

Banking giant Wells Fargo is ready to play with the big boys in the mutual fund business.

Recruiting experts are predicting a relatively flat job market for the fund industry in 2005, although the trading scandal continues to reshape the boardrooms and executive suites of fund management firms, big and small.

T. Rowe Price has added adviser share classes on four of its funds, thereby expanding its total adviser class lineup to 24. One of the funds, the T. Rowe Capital Opportunity fund, has also been given an R share class, making it eligible for sale in fee-based retirement plans. The company's complete lineup of R class funds is now 13.

Small-cap funds led the charge of all types of equity funds in the fourth quarter, posting 14.2% gains, Investor's Business Daily reports. Diversified equity funds averaged 10.67% during the quarter to end a largely uncertain year on a high note.

The Vanguard Group's exchange-traded fund lineup more than doubled in terms of assets under management last year as the mutual fund titan rolled out 18 new ETFs, CBS MarketWatch reports.

Baltimore has a new iron man to challenge the former Oriole infielder's record streak of 2,632 consecutive game appearances. Bill Miller, portfolio manager on the Baltimore-based Legg Mason Value Trust fund, leveraged a late-December surge to beat the Standard & Poor's 500-stock index for the 14th consecutive year. The next-longest streak in the industry is half as long.

An aggrieved investor has filed an arbitration claim accusing Morgan Stanley was accused of accepting kickbacks from insurers seeking to promote a select group of variable annuities and investments, The Wall Street Journal reports.

To crack down on confidentiality loopholes, the Securities and Exchange Commission has ordered hedge fund group D.E. Shaw & Co. to reveal its holdings, valued at $21 billion.

California Gov.Arnold Schwarzenegger roiled the institutional pension plan markets by vowing to terminate access to state pension plans for newly hired workers, Bloomberg reports.

Mutual fund providers have become the focus of a new regulatory probe aimed at determining whether stock-trading rebates have benefited shareholders or lined the pockets of investment managers, The Wall Street Journal reports.

New York Attorney General Eliot Spitzer encountered a setback in his campaign for governor this week when a prominent U.S. business official branded him a shameless self-promoter who abused his office, The Associated Press reports.

Robert Stearns, the first Marsh & McLennan employee to be accused in New York Attorney General Eliot Spitzer's probe of bid-rigging and price-fixing in the insurance industry, pled guilty in New York State Supreme Court Thursday to criminal charges, Bloomberg reports. He faces four years in jail, although that could be lessened in light of his promised cooperation.

AIM Investments has promoted mutual fund veteran J. Philip Ferguson to chief investment officer, the company announced Wednesday.

Nuveen Investments will launch a second closed-end exchange-traded fund that uses an equity index option strategy supported by a portfolio of common stock and hedged with options. The company launched its first, the Nuveen Equity Premium Income Fund (JPZ), last October.

Finding good stocks for small-cap funds may be trickier over the next few years, according to Ric Dillon, manager of the Diamond Hill Small Cap Fund, run by Diamond Hill Investments. "In the 27 years I've been in this business, this is the most difficult period I've ever had finding attractively valued U.S. equities," Dillon told Dow Jones Newswires.