Compliance

The Federal Reserve is extending a number of liquidity programs set to end on April 30 through Oct. 30 “in light of continuing substantial strains in financial markets.”

Fifty-five percent of the hedge funds in the U.S. are registered with the Securities and Exchange Commission, according to Hedge Fund Research.

The New Jersey Bureau of Securities has barred three former Merrill Lynch brokers for allegedly enabling Millennium Partners to place more than 25,000 market-timing trades. Further, the three—Christopher Chung, Kevin Brunnock and William Savino— must pay $1.15 million in civil penalties.

Mutual fund prospectus provider NewRiver is suing Morningstar for using Internet espionage to steal information from its patent-protected system.

Calls for greater oversight of the investment advisory profession continued last week, with key congressional leaders pushing the industry to come up with changes designed to prevent future fraud schemes similar to that of the Madoff case.

The Senate Thursday introduced the Hedge Fund Transparency Act of 2009, which, most notably, would require hedge funds to register with the Securities and Exchange Commission. It would also require them to adopt anti-money laundering programs.“There wasn’t much of an appetite for this sort of legislation before the financial crisis,” said one of the bill’s sponsors, Sen. Charles Grassley (R-Iowa). “A major cause of the current crisis is a lack of transparency. The wizards of Wall Street figured out a million clever ways to avoid the transparency sought by the securities regulations adopted during the 1930s. Instead of the free flow of reliable information that markets need to function properly, today we have confusion and uncertainty fueling an economic crisis.”The bill is an amended version of a similar one that Grassley introduced in 2007.

The Department of Labor’s new rule that would permit advisers affiliated with fund companies administering a 401(k) plan to give advice, is drawing fire—so much so that industry observers don’t expect it to last.The rule would permit an adviser to give advice if they either use a computer model that suggests appropriate investments given a person’s age and risk tolerance, or a flat-fee structure whereby they would not stand to benefit more for suggesting one fund over another.In passing the new rule, the DOL said, “Access to professional investment advice is particularly important now for workers as they manage their 401(k) plans and IRAs in changing and volatile financial markets.”One critic, however, is Rep. George Miller (D-Calif.), chairman of the House Education and Labor Committee, who recently testified that the law is flawed because “it will allow financial services firms to offer potentially conflicted investment advise on workers’ retirement accounts.”Financial planner Chad Griffeth agreed, telling Dow Jones, “The rule does not prevent potential for conflicted advice.“The controversy exists in that the person delivering the advice must adhere to specific fiduciary criteria, but their affiliated firm, whether that’s a broker/dealer, mutual fund company, insurance company or bank, does not,” Griffeth said. “[This] opens the door on the part of brokerage firms and mutual fund firms at the sake of participants, whom I fear wouldn’t know what questions they should ask to ferret out conflicted advice.”

Fair value reporting seemed anything but fair last October when prices fell off a cliff.

The Department of Labor has ruled that financial advisers affiliated with the mutual fund companies administering 401(k) plans can offer advice. However, they must reveal the source of their fees, which will remain constant, regardless of their recommendations. If they use computer models, they must also disclose that.

The events that occurred in the financial services industry over the past year were once thought inconceivable. At this point, regulators are chomping at the bit to reverse how Wall Street does business, and investors are downright spooked. The editors of SourceMedia's business publications offer their views on how these dramatic shifts on Wall Street and in corporate America will impact businesses and investors this year.

NEW YORK - The whole world will be in a recession throughout 2009, economists say, but it will be the U.S. and its strong dollar that lead the world to recovery sometime in 2010.

Millionaires and affluent investors suffered steep losses in 2008, and most, particularly Baby Boomers, are rolling their remaining assets into cash and stable-value investments for the foreseeable future.

President-elect Barack Obama's transition team is working closely with House Financial Services Chairman Barney Frank and other lawmakers to make sure that municipal debt is included in the federal government's economic recovery programs.

Massachusetts Secretary of the Commonwealth William Francis Galvin filed an administrative proceeding Tuesday against Reserve Funds and its founder Bruce Bent, accusing them of lying to investors about the dire straights of their investments in Lehman Brothers.

Variable annuity sales sank in 2008 as the stock market's swoon scared investors off.

The Federal Reserve has allowed more companies to take part in its program to add more liquidity to money market mutual funds.

The Investment Company Institute, along with the UK's Investment Management Association and Australia's Investment and Financial Services Association, has released a combined statement in support of prudent regulatory oversight of short selling.

Standard Chartered’s Hong Kong division has agreed to reimburse $320,000 to 1,000 investors who were allegedly disadvantaged by the firm’s permitting Stone Castle, a Millennium Partners subsidiary, to market time 24 mutual funds managed by ACM Funds and Scudder Global Opportunities Funds.

Talk about leaving with an impression. The likely legacy of Securities and Exchange Commission Chairman Christopher Cox, when he steps down this year after taking on the position in 2005, is likely to be that of ineffectiveness during the worst economic period since the Great Depression, The Wall Street Journal reports.

The Securities and Exchange Commission has received an emergency court order to halt a suspected Ponzi scheme targeted to Haitian-American investors.