Compliance

Industry watchers are stunned that Vanguard, a champion of low fees, has caved in to the realities of lower assets by raising fees on 31 of its 110 funds, albeit a scant average of 0.05%. But the truth is, poor market performance has ravaged assets at many fund shops, and grappling with lower assets, they are looking for ways to control costs, MarketWatch reports.

PALM DESERT, Calif. - Andrew Donohue, director of the Securities and Exchange Commission's Division of Investment Management, said Monday that he doesn't think the SEC will push for changes to rule 12b-1 govering mutual fund fees this year.

Investors seeking safety and stability have recently been moving massive amounts of their assets into money market mutual funds, causing the funds to swell to nearly $4 trillion and making them the single largest mutual fund asset class, according to the Investment Company Institute.

The Investment Company Institute’s money fund working group has recommended a series of measures to make money funds more stable, less prone to massive redemptions all at once and more transparent—all in an effort to help the funds maintain investors’ faith and their $1 NAV.

Samuel Israel, Bayou Group

While money funds have provided one of the few bright spots for the mutual fund industry recently—with $3.9 trillion in assets, they currently hold about 40% of all of the total $9.4 trillion held in mutual funds—they are headed for reforms that could reduce their current paltry yields of 0.29% even further, the Associated Press reports. The government is likely to restrict the funds' holdings to avoid another fund breaking the buck, as the Primary Fund did last September.

Congress is considering whether to make major revisions to the fair-value accounting rules that have created so much controversy lately. Possible changes include suspending the rules, improving value-at-risk measurements and reinstating the uptick rule.

The mutual fund industry is eager to hear the outcome of a U.S. Supreme Court case that could determine the fate of the Gartenberg standard, an old legal precedent used to determine whether mutual fund fees are too high that has set a high burden of proof for investors and spared the industry from lawsuits.

The new chairman of the Securities and Exchange Commission is asking Congress to approve a large budget increase to pump up the agency's enforcement, examination and risk assessment efforts.

The Investment Company Institute has named Dean R. Sackett III and Donald C. Auerbach as leaders of its government affairs staff.

Unlike his predecessor, Paul Volcker, the current chairman of the Federal Reserve doesn’t believe money market funds should be regulated like banks, with reserve requirements and mandatory insurance.

Last year, the U.S. Court of Appeals for the Seventh Circuit ruled that a case three investors in Oakmark Funds had brought over what they alleged to be excessive fees failed to meet the burden of proof, setting an important precedent that protected fund firms against such cases.

In order to achieve meaningful reform of the financial services industry, Congress should create two key regulatory positions to oversee financial markets, according to a proposal last week by the Investment Company Institute.

To mitigate against any future financial catastrophes, the Investment Company Institute on Tuesday called for two new regulators that would focus on systemic risk and the capital markets, bridging the functions of the Securities and Exchange Commission and the Commodity Futures Trading Commission.

The chairman of the Senate Special Committee on Aging has called for more scrutiny of target-date retirement funds after several 2010 target-date funds posted huge losses in 2008.

NEW YORK - The Securities and Exchange Commission has given U.S. companies more time to comment on its proposal to adopt international financial reporting standards (IFRS), but this extension may be creating uncertainty among those who thought the conversion was a done deal.

The Securities and Exchange Commission is reportedly scrutinizing asset management firms’ custodial arrangements to ensure that they are properly protecting customers’ assets.

Connecticut lawmakers have proposed hedge fund regulations, including obtaining a license, annual audit, disclosure of fees and significant changes in management or investment strategy, as well as a higher minimum investment threshold of $2.5 million for individuals and $5 million for institutions.

Investment Company Institute President Paul Schott Stevens testified before the U.S. House of Representatives Education and Labor Committee on Tuesday to avow that the 401(k) model is working, in spite of the market’s downturn.

The Alternative Investment Management Association, a hedge fund group headquartered in the U.K., is pushing for more transparency, in an effort to stave off regulation.