Compliance

The Ontario Securities Commission is planning to bring market-timing charges against a number of mutual fund companies in Canada within the next few weeks, it was reported last week. But the charges are likely to be focused on market-timing abuses, rather than illegal late trading.

A new bill proposed in the House would exempt up to $20,000 in annuity income from federal taxation. The Retirement Security for Life Act of 2004 proposes that 50% of annuity income, up to $20,000 annually, be free of taxes, amounting to savings up to $5,000 for someone in the 25% tax bracket.

The wait for details on the SEC's new fund independence rules is over, for last Tuesday, the Commission released its final regulations.

The days of cloak-and-dagger proxy ballots are over.

Citigroup has reportedly received a Wells notice from the Securities and Exchange Commission related to dealings at its mutual fund arm, Smith Barney. Back in November, Citigroup admitted to regulators that an agreement to erect an internal transfer-agent wing was not disclosed to the company's own mutual funds. To correct the problem, it said it would pay $17 million back to the funds.

It's crunch time for mutual funds. With the Oct. 5 deadline for mutual funds to designate a chief compliance officer just two months away, fund executives are scrambling to get their policies and procedures in place. The question is are they ready?

The noise surrounding hedge fund registration grew to a thunderous clap last week, as Congress heard testimony from several industry professionals and government officials on the merits of such a groundbreaking move.

Just when the mutual fund scandal seemed to be offering little in the way of new twists and turns, the plot thickens.

Many Congressmen are finding out that when it comes to fund reform, "you can't always get what you want," as Mick Jagger sings.

Things went from bad to worse for Invesco Funds, as federal securities regulators announced plans to increase the number of individuals facing civil fraud charges.

In a little over 11 weeks, firms are going to have to hire a chief compliance officer, a requirement that could prove to be a tall task for fund shops, particularly smaller ones.

The Securities and Exchange Commission reportedly may soon charge Fremont Investment Advisors and an ex-employee for late trading and market timing, the company said.

Investors have filed a class-action suit against Salomon Smith Barney for allegedly breaching its fiduciary duty between March 22, 1999 and March 22, 2004 by claiming its financial advisers were selling mutual funds objectively when, in fact, they were steering them into the firm's "inferior" proprietary family of more than 220 funds.

NEW YORK -- At a recent news conference held here, Calvert, a socially responsible investment management firm headquartered in Bethesda, Md., unveiled new corporate guidelines it created for the proper ethical and moral treatment of women workers. The news event was co-sponsored by Calvert and the United Nations Development Fund for Women (UNIFEM), which provides financial and technical support for the enhancement of women's rights.

Playing favorites and making quid pro quo deals have been longstanding practices in the financial services industry, and the 401(k) marketplace is not immune to its ill effects. As such, federal regulators have joined their state counterparts in examining the opaque nature of 401(k) fees and related revenue-sharing arrangements.

The NASD has fined five brokerage firms $625,000 for failure to have the supervisory systems in place to detect and prevent late trading. The five are D.A. Davidson & Co., T.D. Waterhouse Investor Services, Stifel Nicolaus & Co., National Planning Corp. and SII Investments, Inc. Each of these firms processed trades after the 4 p.m. close of the market, the NASD said.

Bank One Corp.'s mutual fund arm on Tuesday agreed to a $90 million settlement with New York state and federal regulators for allowing hedge funds to engage in abusive round-trip trading of its fund shares, a racket that depleted the returns of long-term shareholders.

In a new era for independent directors, Dawn-Marie Driscoll, already a busy woman, is likely to be even more in demand. She is president of Driscoll Associates, a Cape Coral, Fla.-based business ethics consulting firm, and executive fellow and advisory board member at the Center for Business Ethics at Bentley College in Waltham, Mass. In addition, she serves as an independent trustee and board chairman for the mutual funds at Scudder Investments and serves on the board of governors of the Investment Company Institute. She has also been a member of the ICI directors' services committee since its 1995 formation and served as its chairman from 1998 to 2002.

CHICAGO--During a star-studded Morningstar investment conference panel, investor advocate Mercer Bullard called for a complete overhaul of the way fund companies conduct business, while Bob Pozen and Ed Haldeman warned of the unintended consequences of overzealous regulation.

There was no place of refuge for tainted mutual fund shop Pilgrim Baxter & Associates, as the company last Monday agreed to a $100 million settlement with regulators for engaging in abusive trading practices.