Special Program Root Tag

If mutual fund boards feel that something is not "fundamental," they can change it without seeking any shareholder input. So for Fidelity Investments, merging funds into less expensive ones is not considered fundamental, and the board is trying to pass it through without a vote, The Wall Street Journal reports.

One year after New York Attorney General Eliot Spitzer began his scud-missile attack on the mutual fund industry, the operations at mutual fund companies have changed substantially, The Wall Street Journal reports. But the long-term impact is not yet known, mostly because several Securities and Exchange Commission proposals are still in their early stages.

Three former Invesco executives agreed to pay a combined $340,000 in fines to settle enforcement actions for their role in a market-timing scheme that allowed preferred clients to make excessive trades in exchange for sticky assets.

Expenses Lowered to 10 Basis Points for Five Funds

The long-awaited and much maligned deadline for mutual funds to disclose how they vote their proxies came and went last week as investors for the first time were given a peek at decisions on such matters as executive compensation and boardroom elections.

The Securities and Exchange Commission filed civil charges against broker/dealer National Clearing Corp. (NCC) and its parent company, JB Oxford Holdings (JBOH), for allowing customers to engage in late trading and improper market-timing activities. According to the SEC complaint filed in the U.S. District Court of Los Angeles, each of the defendants facilitated thousands of market-timing and late trades in more than 600 mutual funds between June 2002 and Sept. 2003.

Franklin Resources said in a regulatory filing that it may be in trouble from the state of California for revenue-sharing payments made to brokerage firms. California Attorney General Bill Lockyer told the company that enforcement action would be authorized, Franklin said. The news comes seven months after Lockyer announced a deep look into revenue sharing between mutual funds, including Franklin, and brokers.

Asset allocation product specialist Ibbotson Associates has announced the promotions of three company veterans, Mike Barad, Lori Howard and Scott Majeski, to vice president. Barad is now in charge of presentation materials and publications, Howard heads up software quality assurance, and Majeski is head of the investment management services group.

Mark A. Adler, a Harvard law graduate with experience in both the private and public sectors of the law and the Securities and Exchange Commission's assistant chief litigation counsel since 1997, has been promoted to the title of deputy chief litigation counsel for the enforcement division. Adler replaces Peter H. Bresnan, who was promoted earlier this year and is now an associate director of the same division.

Invesmart recently hired three industry veterans to tackle retirement plan consulting in different regions of the country. Steven Burnett has joined the firm's Maine office, where he is responsible for the northern New England region. Joseph Jennings, working out of Austin, Texas office, now oversees the Southeast region, while James Klomparens, based in Cleveland, is in charge of the northern Great Lakes region. Reporting to National Sales Manger K.C. Cannon, the three will be working for the full-service retirement firm serving more than 5,500 retirement plans.

The hearty predictions surrounding outsourcing in the asset management industry three years ago that mostly fizzled during the bear market, may finally be on their way to fruition, according to a recently released white paper.

Although fund advisors are beginning to return to initial public offerings, particularly to expand offerings and competencies, (see MME 8/30/04), there are risks associated with tapping the capital markets.

Prudential Financial has added three new institutional sub-advised fund products in an effort to expand its offerings to plan sponsors and employees to help them manage retirement investments.

Vanguard isn’t taking Fidelity’s cuts on five of its equity index funds lightly. The Valley Forge, Pa.-based fund giant posted a message on its Web site accusing Fidelity misleading investors by disguising temporary price rollbacks on the five funds as permanent cost reductions.

A lawsuit challenging conventional methods for mutual funds to collect marketing fees from shareholders cleared a significant hurdle last week in a New York federal court, The Wall Street Journal reports.

Even after an entire year of headlines about the mutual fund scandal, most investors are ignorant of the regulatory probes. Of 744 mutual fund investors that Dalbar surveyed on behalf of Reuters, 75% were unable to name a single firm that has been named in the scandal. Eighty-six percent said they did not think the scandal had affected their investments in any way. And asked whether the scandal has prompted them to become more knowledgeable about mutual funds, 66% answered no.

American Funds continued its high-paced belting of the competition by placing five of its funds in Financial Research Corp.'s top 10 list for July, a month that saw the mutual fund industry as a whole rake in inflows of $12 billion.

The National Association of Insurance Commissioners will be holding an election to reappoint its entire slate of officers, following the resignation of President Ernie Csiszar and Vice President Jim Poolman. Officers usually hold their posts for the full calendar year.

Thanks to the tumultuous conditions in the mutual fund industry, Boston-based State Street, a back-office leader for those fund companies, may look for a buyer, AFX reports.

With more complex financial portfolios creeping into their lives, rich investors are actually hiring advisers to advise their advisers, Dow Jones reports.