Compliance

Two ranking Congressmen sent the Securities and Exchange Commission a letter yesterday, urging Chairman Christopher Cox to cut a break on redemptions on auction-rate securities for mutual fund portfolio managers and their supporting operational and compliance teams. The Congressmen pointed to illiquidity and hard-to-price conditions for auction rates today.

Fines Continue to be Levied on Fund Companies for Market Timing & Late Trading, With a Renewed Focus on U.K. Orders

In a lawsuit stunning for giving renewed life to the revenue-sharing scandals and for extending the period certain through 2006, Wells Fargo has been hit with a class-action lawsuit for allegedly sharing mutual fund revenue with brokers and other selling agents, without informing shareholders and through excessively high fees.

Senate Democrats in Connecticut are pushing for a state-sponsored 401(k) retirement plan for small businesses, designed for employers who can’t afford to offer a retirement plan to their workers.

A number of news events in the past week alone indicate without question the U.S. economy is at a dangerous inflection point, but so far, no one-no economist, analyst, fund manager, regulator, legistator, president or CEO-is willing to put together the pieces to talk about something other than snapshot first-quarter, year-over-year or historical trendline data that make a case for the return of the markets.

John Paulson, founder of the hedge fund Paulson & Company, made an unprecedented $3.7 billion last year by betting against subprime mortgages and the financial products that held them.

Standard & Poor's said the potential bill to U.S. taxpayers for bailing out Wall Street firms could grow to $400 billion. If Fannie Mae and Freddie Mac are included, the bill could soar by an additional $1.4 trillion, for a total of $1.8 trillion, causing the U.S. government to loose its AAA rating and plunging the country into a deep and prolonged recession.

Mutual fund managers invested in securities with any type of credit exposure will want to know that sister publication Asset Securitization Report has learned that another major wave of $2.8 billion-to perhaps as high as $8 billion-in collateralized debt obligation (CDO) liquidations is set to hit the market.

The Financial Industry Regulatory Authority (FINRA), the Securities and Exchange Commission and New York Attorney General Andrew Cuomo are looking into possible irregularities in auction rate securities (ARS).

Standard & Poor’s said the potential bill to U.S. taxpayers for bailing out Wall Street firms could grow to $400 billion, reports The Washington Times.

Samuel Israel III, the former Stamford, Conn., Bayou hedge fund manager who authorities found to have cheated investors out of $400 million, was sentenced to 20 years in prison by a federal judge, the Associated Press reported Monday.

Hedge Fund Managers Have Rough Month

NEW YORK - Equity mutual funds were hit with "drastic declines" across-the-board in just about every sector and style in the first quarter of 2008.

Consumer confidence in the economy, including stocks, bonds, mortgages, credit cards and structured products, is dropping, but experts say consumers need to stay invested in a fully diversified portfolio of mutual funds for their own good and for the good of the economy.

While criticisms abound as to who, or which regulatory entity, or set of laws and oversight, is to blame for the credit crisis, the Securities and Exchange Commission is quietly flexing new muscle of its own on the mutual fund trading scandal front.

A U.K.-based hedge fund that was sued by the Securities and Exchange Commission on Thursday said the lawsuit is “utterly misguided,” and vowed to fight the charges.

Chinese regulators are becoming increasingly skeptical of financial advice from the U.S. to sacrifice the country’s stability for the greater good of stabilizing the global economy, Reuters reports.

Regulators at the Securities and Exchange Commission have sued London-based hedge fund Pentagon Capital Management Plc over an alleged scheme to defraud U.S. mutual fund shareholders.

The Investment Company Institute said it welcomes Treasury Secretary Henry Paulson’s plan to overhaul the financial system’s regulation apparatus.

With ink from the news of the 2008 Recession already drying in the textbooks and the Big Chill on Wall Street overriding Hookergate glee, it's time, as they say, to think outside of the box.