Compliance

Lawmakers on the House Education and Labor Committee voted 13-8 each on two measures concerning 401(k) plans Wednesday, one that would require them to clearing disclose fees and break them down, another that would only permit investment advice to come from independent advisers.Fees would have to be displayed in all four categories: administrative, investment management, transaction and other.“The lack of transparency in the 401(k) system is unacceptable and must end now,” subcommittee Chairman Robert Andrews (D-N.J.) told Dow Jones.

While the financial services industry largely embraced most of the Obama administration’s financial services overhaul, the idea of removing money funds’ $1 net asset value is causing widespread concern in the mutual fund industry.“If you float the value of a money fund, you’ve essentially destroyed the product,” said Investment Company Institute President Paul Schott Stevens. “We’re going to explain clearly why we believe a fluctuating [NAV] is a very bad idea.”The Securities and Exchange Commission is expected to propose new money fund rules next week, including a floating NAV for money funds. Another idea is disclosing the $1 NAV to the third decimal, which the ICI also opposes.But the Obama administration believes a floating value for money funds, along with imposed limits on risk, capital requirements and access to emergency liquidity facilities from private sources, will prevent a run on money funds that could endanger the entire capital markets, as what occurred last September when the Primary Fund broke the buck. In addition, the administration is calling on the President’s Working Group on Financial Markets “to assess whether more fundamental changes are necessary and to address systemic risk more directly.”The administration is asking for the Working Group to prepare its report by Sept. 15.At the same time, it warns that additional regulations on money funds, which are vital to the capital markets system and the day-to-day operations of corporate America, could have the opposite effect of driving investors into unregulated or less regulated money market investment vehicles.

A U.S. district court has given investors in the Reserve Funds’ Primary Fund until July 22 to object to the Securities and Exchange Commission’s plan to distribute assets on a pro rata basis. Of the fund’s original $63 billion in assets, $4.55 billion has yet to be returned to investors.

Congress once again is scrutinizing 401(k)s this week, this time through two bills that would disallow advice through an interested party and require clear disclosure of fees.

At the hearing on target-date funds that the Department of Labor and the Securities and Exchange Commission is holding tomorrow, the focus is likely to be on better disclosure of holdings.

The Department of Labor and the Securities and Exchange Commission have released the agenda and list of speakers at this Thursday’s hearing on target-date funds.

NEW YORK -- Investors tend to stay quiet about financial products they don't understand as long as the profits keep coming in, but when the tide goes out and profits fall, they want answers.

After consenting to a $40 million fine by the Securities and Exchange Commission for inflating the value of mortgage-backed securities in its Ultra Short Opportunities Fund, Evergreen Investment Management is now being investigated by the Massachusetts Securities Division for valuations in another mutual fund and a variable annuity.

The U.S. House of Representatives has reintroduced a 401(k) fee disclosure bill, the fifth such bill to be considered by Congress.

The U.S. House of Representatives has introduced the Retirement Security Needs Lifetime Pay Act, designed to encourage Americans to invest lifetime income annuities through tax breaks.

The White House’s earlier plan to merge many of the regulators overseeing the financial services industry is likely to be scrapped, The Wall Street Journal reports.

Thanks to shady money managers like Bernie Madoff who ruined it for everyone, the lucrative and surreptitious heydays of hedge funds may be gone for good.

A Connecticut bill that would have imposed transparency and licensing requirements on hedge funds failed to be signed into law Wednesday when the House of Representatives ran out of time to vote on the measure.

Although the Securities and Exchange Commission is not requiring fund companies to begin producing summary prospectuses until Jan. 1, some fund companies, including the Guinness Atkinson Funds, have already started to equip investors with the plain English, four-page documents.

The Securities and Exchange Commission announced the members of its newly created Investor Advisory Committee. The committee’s mission is to give investors a greater voice in the regulator’s work.The 15-member panel will advise the Commission about matters concerning investors in the securities markets; provide investor perspective on current, non-enforcement regulatory issues; and be a source of information and recommendations to the Commission concerning its regulatory programs from the point of view of investors. The committee will be co-chaired by Richard “Mac” Hisey, president of AARP Financial and AARP Funds, and Hye-Won Choi, senior vice president and head of corporate governance for TIAA-CREF.

Citi has launched a free Fund Governance Portal for its regulatory administration services clients.

The Securities and Exchange Commission is creating the position of chief operating officer and looking to expand its ranks by 1,000 to better combat fraud.

The Securities and Exchange Commission began repaying more than 590,000 AIM investors $78 million in a fair funds distribution for the market timing that hurt their returns.

Connecticut lawmakers in the House of Representatives are expected to pass a hedge fund transparency bill, possibly ending the state’s days as a hedge fund haven, The Wall Street Journal reports.

In a challenge to one of mutual funds' strongholds, exchange-traded fund providers are targeting defined contribution plans.