Compliance

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.

Charles Schwab Corp. of San Francisco is facing a potential class-action lawsuit over no-load ultra short bond fund that allegedly loaded up on mortgage-backed securities and misled investors.

Eliot Spitzer, onetime Wall Street crusader, New York State Attorney General and New York Governor in a first term that ended with his abrupt resignation on March 17, may be forced to release thousands of incriminating e-mails linked to his alleged smear campaign against Senate Majority Leader Joseph L. Bruno.

Albany District Attorney David Soares has done an about-face and has told New York Senate Majority Leader Joseph Bruno that ex-governor Eliot Spitzer’s alleged involvement in an investigation into Bruno’s whereabouts was absolutely, positively Spitzer’s orders, according to reports over the weekend.

A £1 billion ($2 billion) hedge fund run out of London by Lewis Chester, Pentagon Capital Management, is under investigation by the Securities and Exchange Commission, The New York Times reports this morning.

Treasury Secretary Henry M. Paulson Jr. said Wall Street investment firms should provide more information on their financial condition if they are allowed to borrow money from the Federal Reserve.

Eliot Spitzer, former Wall Street crusader, New York State Attorney General and New York Governor in a first term that ended with his abrupt resignation on March 17, may be forced to release thousands of incriminating e-mails with regards to his alleged smear campaign against Senate Majority Leader Joseph L. Bruno.

Shareholders in a number of large Fidelity mutual funds, most notably the $73 billion Contrafund, succeeded in forcing a proxy vote that will take place later today on whether the company should institute a “genocide-free” investment policy, the Associated Press reports. The unbinding measure is unlikely to pass, however.

The Securities and Exchange Commission recently suspended and fined two brokers with Wachovia Securities $250,000 each for their roles in a market-timing scheme that cost mutual fund shareholders hundreds of thousands of dollars in losses, writes The Miami Herald.Thomas C. Bridge, 41, of Fort Lauderdale and James D. Edge, 46, of Lake Worth, both worked at Wachovia's Boca Raton office. Edge was Bridge's supervisor.According to Judge Brenda Murray, Bridge engaged in numerous market timing trades, prompting complaints from mutual fund companies. Instead of stopping Bridge, Edge helped him circumvent trading restrictions, including the use of multiple account numbers and broker ID numbers to hide transactions.Bridge has been suspended for a year and Edge has been suspended for 30 days, with the stipulation that he never be a supervisor again.The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.

A federal judge in Pennsylvania has given final approval to a $14 million settlement against New York Life Insurance Co. by employees who said the company’s retirement plans were improperly invested into mutual funds owned by New York Life.

A proposal by the Securities and Exchange Commission to shorten mutual fund disclosure statements is meeting widespread support, and a new rule could take effect by 2009, if not sooner.