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Wachovia Corp. has announced its intention to merge with SouthTrust Corp. in a deal worth $14.3 billion, creating the largest bank in the southeast and the fourth largest in the country. Together, the banks will have assets of $464 billion and market capitalization of $76 billion.

The SEC and New York State’s Attorney General Eliot Spitzer’s office have settled their cases in federal district court with Pilgrim Baxter & Co. The company has agreed to pay the SEC $40 in disgorgement and $50 million in civil penalties for allowing select clients to market time its funds. In addition, the company has agreed with Spitzer’s office to reduce management fees by 3.16% over a five-year period, a settlement valued at $10 million.

A class-action lawsuit was filed last week against Smith Barney and Salomon Brothers for alleged misleading of mutual fund investors.

The Vanguard Group has added a series of new tools to its Web site, some of which make it easier for investors to find Vanguard offerings comparable to their non-Vanguard holdings.

SEC Commissioner Cynthia Glassman last week said she is not sold on the agency's rule proposals requiring an independent chairman and the implementation of a mandatory redemption fee.

Separately managed accounts, considered our nation's hippest new investment product, slowly have been gaining traction overseas as Japanese brokerages have begun to dip their toes in the pool.

ICI President Paul Schott Stevens said last week that his agency is firmly behind reform in the industry and called on the SEC to "administer strong medicine to prevent trading abuses in the future."

Having dodged the U.S. mutual fund industry scandal and a mutual fund share pricing problem of its own back home, AIM Trimark Investments of Toronto has ventured into the U.S. asset management industry for the very first time. AIM Trimark is the $40 billion Canadian investment management subsidiary of Amvescap of London.

The former CEO of Putnam Investments, Lawrence J. Lasser, has settled his severance package dispute with the company and will receive $78 million from the parent firm, Marsh & McLennan.

Securities Industry Association President Mark Lacritz warned that the mutual fund and corporate scandals and resulting new compliance requirements have put both technology and financial services firms in a touch spot, he told 700 delegates at the annual SIA technology management conference in New York.

Charles Schwab CEO David Pottruck said he expects scandals afflicting the financial services industry to continue. "There will continue to be new investigations and new revelations. There are still things to find in this industry," Pottruck told a business conference in New York. While declining to elaborate on his statements, he said the industry still employs questionable practices.

Janus Hires Zimmerman to Head Institutional Sales

The notion that the fund scandal is all but over has been gaining steam in the general press and among some in the industry recently, but the reality is that while it has been a long, hard nine months, the mutual fund industry is far from out of the woods. Disinterest should not be mistaken for inactivity.

They were seven and they fought like seven hundred. That was the famous tag line of the classic 1960 western film "The Magnificent Seven," a tale about a septet of mercenaries called on to protect the inhabitants of a small village from being pillaged by outlaws.

This October is the deadline for funds to comply with the Securities and Exchange Commission's new Rule 38a-1, requiring all registered investment companies and investment advisors to designate a chief compliance officer. The new CCO will be empowered with full responsibility and authority to develop, administer and enforce appropriate policies and procedures for the firm. One area that will surely generate significant attention will be an examination of all third-party relationships, including outsourced transfer agency and shareholder servicing functions.

Schwab Institutional's assets under custody grew 4.5% in the first quarter, and the company's president said the industry's scandals and investigations played a role in some of the asset gains.

WASHINGTON - Insurance companies are soon to find enforcement actions against them aired for all to see. The Securities and Exchange Commission is working on cases in which insurers made special arrangements for market timing, according to Ari Gabinet, district administrator of the SEC's Philadelphia District Office. "You may expect to see more cases rising up," he told attendees at the Regulatory Affairs Conference sponsored by the National Association of Variable Annuities.

Arthur Bonnel stepped down June 1 as head of the Bonnel Growth Fund, handing over the reins to Frank Holmes. Now, the $75 million fund is appropriately named Holmes Growth, Investor's Business Daily reports.

We’re still a few weeks off from the due date, but it’s safe to say that the Internal Revenue Service is gearing up to fit 403(b) plan regulation in line with the 2001 tax law changes. Sources say this will be the first time that the IRS has made sweeping comprehensive changes to these plan rules since 1964.

New York research firm Strategic Insight reported Friday that mutual fund inflows for the first half of 2004 were about $190 billion, even after "dramatic monthly inflows through April" gave way to a "sharp decline in equity fund inflows" in May.