Special Program Root Tag

Bear Stearns has tapped Beth Golden, deputy of special projects for New York Attorney General Eliot Spitzer, to oversee its global compliance efforts.

The lure of hedge fund rewards is starting to take its toll on traditional mutual fund firms. To stop that from happening, many mutual funds have decided to start up hedge funds themselves, Reuters reports.

New York Attorney General Eliot Spitzer has become notorious for settling with mutual fund firms only after they agree to lower fees, pay huge amounts of money back to investors and change their policies. But when it comes to the lawsuit against former New York Stock Exchange Chairman Richard Grasso, Spitzer is not even considering a settlement anymore.

Variable annuities and variable life insurance are complicated and too often sold improperly, concluded the Securities and Exchange Commission and the National Association of Securities Dealers in a jointly written 30-page staff report Wednesday. The NASD has seen many customer complaints and examples of improperly sold policies, despite the fact that the products have been subject to regulation by both agencies.

Janus Capital Group suffered $5.9 billion in outflows for May, up from $700 million of outflows in April, the company announced. However, institutional clients’ plans to redeem their assets should now be winding down, Janus said.

The Securities and Exchange Commission has named Mark Schonfeld regional director of its Northeast regional office, a post responsible for overseeing the Commission’s offices in New York, Boston and Philadelphia. The region also has enforcement and examination programs in 13 states and Washington. Schonfeld replaces Wayne Carlin, who has since moved on to the private sector.

Even though the mutual fund scandal has claimed employees, executives, entire companies and tens of billions of dollars of assets, the push toward reform may be weakening, The Baltimore Sun reports.

John Hancock Financial Services has added funds from John Hancock Funds and Fidelity Investments to its Freedom 529 college savings plan.

Citigroup subsidiary Smith Barney said it put the kibosh on market timing activity it found in one of its funds in its Consulting Group Capital Markets Funds back in 2001, according to a recent regulatory filing.

The Securities and Exchange Commission charged Boca Raton, Fla.-based Geek Securities with civil securities fraud Friday for both market timing and late trading in mutual funds, the Commission announced.

Deutsche Bank’s Scudder Private Investment Council Boston Office will soon belong to Eaton Vance Corp., the companies announced.

WEDGE Capital Management, a Charlotte, N.C.-based institutional money manager, has become the first company to use CheckFree Corporation’s multiple strategy platform for institutional money management. Previously, the platform, APL-MSP, was used for retail separately managed account (SMA) managers.

One third of private banks are looking to acquire an investment management firm, and a number of investment banks, weary of the fund scandal, are looking to divest their mutual fund units, a new KPMG report.

Daiwa Securities, Japan’s second-largest brokerage firm, will offer separately managed accounts beginning in July with the aim of capturing another 30 billion to 50 billion yen, or $270 to $450 million, from high-net worth clients, Reuters reports.

Mutual fund directors, and the question of whether they should be independent, have become one of the most examined aspects of the mutual fund scandal. But some even question whether fund directors, or even the entire board, are necessary entities in the first place, The Wall Street Journal reports.

Financial services industry scandals have led to new pledges of better governance by companies, but for most, those promises have not led to salary reductions for executives, TheStreet.com reports.

Davenport & Co., a Richmond, Va.-based brokerage firm, market timed variable annuity sub-accounts on behalf of two of its hedge fund clients, the National Association of Securities Dealers charged last week, ordering Davenport to pay $450,000 for improper trading.

Score one for the fund managers.

Former vice presidential candidate Sen. Joseph Lieberman (D-CT) is asking lawmakers to create a new SEC division dedicated to representing investors in the agency's policymaking process, as well as require fund firms to provide easy-to-understand disclosure of fund characteristics.

Despite the pall that has fallen over the mutual fund industry amid discoveries of market timing, late trading, disclosure of non-public fund information and inflated commissions to brokers, the industry actually has something to celebrate. The anniversary of the birth of the very first mutual fund will take place next month.