Compliance

Massachusetts sued Merrill Lynch on July 31 on the charges of fraud and “dishonest and unethical” conduct, Reuters reports.

Luis A. Aguilar, a former partner at McKenna Long & Aldridge LLP in Atlanta, was sworn in as a member of the Securities and Exchange Commission on July 31.

U.S. junk bond mutual funds saw net inflows of $153 million in the week ending July 30, according to AMG Data Services.

U.S. Rep. George Miller of California is probably the best friend 401(k) investors have on Capitol Hill.

Despite market opposition, Argentina recently cut tax breaks for mutual funds and financial trusts, satisfying the center-left government promise to raise taxes on financial earnings, Reuters reports.

Pax World Management Corporation has settled charges by the Securities and Exchange Commission that two of its funds, Pax World Growth and Pax World High Yield, purchased securities that violated their fund policies.

Securities and Exchange Commission Chairman Christopher Cox and US Secretary of Labor Elaine L Choa have signed a Memorandum of Understanding (MOU) to formalize and strengthen the cooperation and relationship between their two agencies. The purpose of the MOU is to share information, related to investments and retirement, to help protect Americans’ $5.8 trillion in retirement assets.

The Securities and Exchange Commission’s Office of Compliance Inspections and Examination released a new ComplianceAlert recognizing common flaws and weaknesses among mutual fund companies.

The Department of Labor on Tuesday proposed requiring 401(k) plan fiduciaries to supply investors with standard account summaries that will clearly state fees, expenses and any administrative costs such as legal, accounting and recordkeeping charges-in actual dollars. Plans will also have to provide performance figures and comparable benchmark returns, information on investment options and how to obtain more detailed information, including education and/or advice.

Investors alleging wrongdoing by their stockbrokers can choose to go to court or face an arbitration panel of three people, including one person from the brokerage industry and two from the public.

GAMCO Investors announced today its appointment of Jeffrey M. Farber as executive vice president of finance/corporate development and chief financial officer.

In his last public appearance as a member of the Securities and Exchange Commission, Commissioner Paul Atkins said that, with regards to shareholder rights, the agency “would be wise to continue to respect the principles of federalism and avoid the temptation to exceed the limitations on its authority delegated by the Congress.”

The Department of Labor on Tuesday proposed requiring 401(k) plan fiduciaries to supply investors with standard account summaries that will clearly state fees, expenses and any administrative costs such as legal, accounting and recordkeeping charges—in actual dollars; performance and comparable benchmark returns; investment options; and how to obtain more detailed information, including education and/or advice.

When the House of Representatives holds a hearing on the merits of 401(k) debit cards, and even Arthur Levitt, the former chairman of the Securities and Exchange Commission, says tapping into that equity might be a “creative way to stimulate the economy”—you know they pose a serious threat to both the mutual fund industry and investors’ retirement.

The European Union proposed a new set of rules Thursday to make Undertakings for Collective Investment in Transferable Securities (UCITS) even more efficient by eliminating additional regulatory hurdles. Most notably, the rules- which will replace 10 directives with just one and go into effect in 2011-will allow cross-border mergers of funds, making Europe's mutual fund industry more efficient. They will also permit master-feeder structures and eliminate much of the administrative paperwork currently required to market funds to other markets in the European Union of 27 member states.

Federal regulators are cracking down on the potential spread of false and misleading rumors that could potentially affect market conditions.

Supporters of pension funds argued before Congress that the plans play a critical role in ensuring retirement security and stimulating the economy.

Bruce R. Bent, founder and chairman of Reserve Management Corp., defended his company’s debit cards linked to 401(k) plans Thursday by saying that they encourage employees to sign up for the retirement accounts and that they reduce the dollar amount of loans taken out against them.

If elected, Democratic presidential candidate Barack Obama plans to increase the capital gains tax between five and 10 percentage points, from its current rate of 15%. The effect of Obama’s possible candidacy, along with his tax program, has already sent concern throughout the financial world, the Newark Star-Ledger reports. Some financial planners are advising investors to take advantage of the current lower rates and to drop some mutual funds and stocks.

The honeymoon between Chinese mutual fund investors and the surging market appears to be over. Investors are attributing large financial loses to what many are characterizing as “unprofessional” management, China Daily reports. Beginning in the third quarter last years, a surge in the Chinese market prompted 23 mutual funds to split their funds, which decreased the price, to try to expand scale quickly.