Special Program Root Tag

Have you wondered what will become of the rapscallions who are guilty of ripping off mutual fund investors?

Traditionally, bulge-bracket firms have given away research in exchange for trading volume and high trading commissions. The commissions paid for part of the research, while investment-banking fees paid for the rest. Over time, Wall Street firms built up expensive operations, flush with highly paid salespeople and large travel and entertainment budgets.

When it comes to information management, companies can be like the sailor who, in a 19th century poem, exclaims, "Water, water everywhere, nor any drop to drink." For financial services firms, potentially useful data springs from a multitude of sources, including call centers, transfer agents, brokerages, Internet contacts and portfolio managers, and in a variety of forms. The challenge is to channel that flow of information so that it becomes a useful resource.

Managed accounts, a cornerstone product for big brokerages, are now also becoming increasingly popular at community banks, industry experts say. These accounts, also called separate or individually managed accounts, are portfolios created for wealthy customers. Such accounts, typically having assets of a few hundred thousand to a few million dollars, provide more flexibility and tax benefits than mutual funds, because they allow investors to own stocks directly. One indication of how popular the accounts have become is that Morningstar started rating them for the first time last year.

Thomson Media, publisher of this newsletter, has promoted Harry Nikpour from advertising sales director to associate publisher of the investment management newsletters. In this role, Nikpour's advertising responsibilities will be broadened to include circulation and marketing for Money Management Executive, Annuity Market News, Investment Management Weekly and the Mutual Fund Service Guide. Nikpour joined Thomson in 1998 as advertising manager for Buyouts, Mergers and Acquisitions Journal and a number of directories.

For the fiscal year ended March 31, Legg Mason generated $297.8 million in net earnings, a 56% increase over last year. Total revenue for the year was $1.941 billion, a 29% uptick from last year, helped mark it the second straight year that Legg Mason set company records.

State and federal regulators told mutual fund firms Wednesday that the investigations and enforcement actions are not finished yet, The Wall Street Journal reports.

PIMCO Thursday became the latest mutual fund company to be slapped with civil fraud charges for allegedly defrauding investors by secretly allowing hedge fund Canary Capital Partners to trade rapidly in and out of its funds.

Research firm Morningstar announced Thursday that it has filed an initial public offering statement with the Securities and Exchange Commission to sell shares of common stock in the company.

Great-West Lifeco, a Canadian insurance giant, has ended its relationship with Putnam Investments because of the Boston firm’s involvement in the mutual fund scandal, Canadian Press reports.

Among Americans over age 50, 83% say that outside pressures have reduced their ability to generate adequate retirement income, according to a survey commissioned by Golden Retirement Resources. Unsurprisingly, the Retirement Flexibility Study found that those with lower incomes have the least flexibility to adapt to economic and life events.

Most financial advisers share their clients’ level of concern about the mutual fund scandal, according to a survey of 124 financial advisers conducted by Select Sector SPDRs, for which State Street Global Advisors serves as the investment advisor. A quarter of advisers expressed little concern about the scandal, mostly because they feel the problems are limited to certain companies.

Jefferson National Life Insurance Co., a former unit of Conseco, may soon be charged by state and federal regulators for improper trades within annuity funds, The Wall Street Journal reports.

Kimberly Campbell, portfolio manager of the Columbia Managed Municipals Fund and the Columbia Tax-Exempt Fund, and Kurt Havnaer, who heads up the Columbia High-Yield Fund, are both back on the job, even as their co-worker Christopher Legallet, who went on leave at the same time as them, remains out of the office, Dow Jones reports.

April showers are supposed to bring May flowers, but for bond funds, a poor April performance may just be a springboard to a yearlong outflow.

Retirement income is key for future success for variable annuity issuers, according to the quarterly outlook from Ernst & Young's Actuarial Advisory Services practice.

American International Group Inc. named a Merrill Lynch & Co. executive, Jacob A. Frenkel, as its executive vice chairman Monday. Frenkel, who joined Merrill in January 2000, will also chair AIG's global economic strategies group.

Reforms as a result of the fund scandal are likely to cost mutual fund companies billions of dollars in revenue, two Merrill Lynch predict, Reuters reports. Firms will see their profits fall as they abandon soft dollars and directed brokerage, lower fees and beef up compliance to meet new SEC requirements, analysts Guy Moszkowski and Cynthia Mayer wrote in a report issued Tuesday.

NASD Tuesday announced a $10 million project to be run by its not-for-profit Investor Education Foundation to better educate investors on financial markets. The foundation will work with other not-for-profit groups and researchers to conduct educational projects.

ING Group's U.S. retail fund unit unveiled a fund Monday with a five-year guarantee period.