Special Program Root Tag

Last year began well enough. But in September, as the first shock waves hit, scandals were revealed and other problems within the fund industry became front-page news, the year turned somber. Investigations escalated, and the U.S. Senate Banking Committee trained its eye on the unfolding chronicle of late-trading and market-timing abuses, launching a series of information hearings with every sector of the industry.

After filing over 80 disciplinary actions in the past two years, the National Association of Securities Dealers is tightening its noose on the variable annuities industry. Late last month, the regulator proposed new rules for variable annuity sales that would increase disclosure and make best-practice guidelines mandatory and enforceable.

It's going to be a lot easier to bring products to market in the near future. Or is it?

The fund scandal has prompted a number of 401(k) plan sponsors to shop for new providers, marking a new opportunity for fund companies.

A group of independent directors has formed the Independent Directors Council to provide education and create a forum to discuss policy issues. The council, an offshoot of the Directors’ Committee of the Investment Company Institute, will be housed in the ICI but has its own staff.

SEC Chairman William Donaldson said "no thanks" to offers from Congress to assist with mutual fund reform, rebuffing efforts by Congress to reform the $7.5 trillion mutual fund industry, Dow Jones Newswires reports.

A newly published report by a senior economist at the Securities and Exchange Commission concludes that mutual fund 12b-1 fees have benefited financial services companies far more than individual shareholders, The Wall Street Journal reports.

Mutual fund companies are emerging from a slump in advertising spending and buying more print advertisements and commercials in finance magazines and cable television channels, Dow Jones Newswires reports.

Separately managed accounts (SMAs) saw assets under management rise 39.2% in the first quarter from the same period last year and 5.8% during the first three months of the year, according to a Money Management Institute report..

Still River has released the third in its series of retirement planning papers, "Retirement Income Planning, Part 3: Risk and Investment Strategy for Retirees." The paper concludes that, despite the recent hype promoting growth investing for retirees, a conservative investment strategy may still be best.

The National Association of Securities Dealers Wednesday announced it has formed a mutual fund task force to recommend ways to make fund costs and distribution agreements more transparent to investors.

J. & W. Seligman replaced $3.7 million back in its funds because of market timing, the company said in a Securities and Exchange Commission filing, Reuters reports.

Federal regulators’ next step toward corporate cleansing is checking whether banks are pressuring affiliated mutual fund units to buy into those banks’ initial public offerings, The Wall Street Journal reports.

The Investment Company Institute Monday said it strongly supports the SEC’s pending proposal to ban directed brokerage arrangements and amend Rule 12b-1 to prohibit fund companies from using these fees to pay commissions to brokers who sell their funds.

Rydex Investments has turned to Ibbotson Associates’ marketing services division, Agency Ibbotson, to help it market its alternative index funds. Ibbotson will start by doing research on how three types of alternative investments – leveraged funds, inverse funds and sector-rotation funds – are used in a traditional portfolio. Leveraged funds are designed to capture returns in upward markets, inverse funds are designed to capture returns in down markets, and sector-rotation funds move into the best-performing sectors in a sideways market.

New York State Attorney General Eliot Spitzer has subpoenaed Putnam Investments over 401(k) fee rebates, Putnam’s parent company Marsh & McLennan has revealed in an SEC filing. The subpoenas refer to "expense reimbursement agreements between Putnam and deferred compensation clients" as well as consultants to the plans, according to the filing.

The Ontario Security Commission is going to send on-site examiners to review the trading records of a number of Canadian mutual fund managers to see if the trading abuses that have been uncovered in the U.S. have occurred in that nation, as well, The Hamilton Spectator reports.

Even before the fund scandal broke, a number of fund managers in recent years have left Janus and Invesco for hedge funds, attracted by their freer investment styles and bigger payout, Rocky Mountain News reports.

Life insurance giant Prudential Financial Inc. revealed Friday that several regulators are investigating its mutual fund dealings, Reuters reports.

The Investment Company Institute has endorsed the Securities and Exchange Commission’s proposal to install a mandatory redemption fee on all short-term mutual fund transactions but says 2% should be a minimum redemption fee.