Compliance

They were seven and they fought like seven hundred. That was the famous tag line of the classic 1960 western film "The Magnificent Seven," a tale about a septet of mercenaries called on to protect the inhabitants of a small village from being pillaged by outlaws.

Schwab Institutional's assets under custody grew 4.5% in the first quarter, and the company's president said the industry's scandals and investigations played a role in some of the asset gains.

WASHINGTON - Insurance companies are soon to find enforcement actions against them aired for all to see. The Securities and Exchange Commission is working on cases in which insurers made special arrangements for market timing, according to Ari Gabinet, district administrator of the SEC's Philadelphia District Office. "You may expect to see more cases rising up," he told attendees at the Regulatory Affairs Conference sponsored by the National Association of Variable Annuities.

Davenport & Co., a Richmond, Va.-based brokerage firm, market timed variable annuity sub-accounts on behalf of two of its hedge fund clients, the National Association of Securities Dealers charged last week, ordering Davenport to pay $450,000 for improper trading.

Score one for the fund managers.

Former vice presidential candidate Sen. Joseph Lieberman (D-CT) is asking lawmakers to create a new SEC division dedicated to representing investors in the agency's policymaking process, as well as require fund firms to provide easy-to-understand disclosure of fund characteristics.

The Securities and Exchange Commission recently voted to require mutual funds to disclose breakpoint discounts in their prospectuses and to adopt codes of ethics. On each measure, the vote was 4-0.

The Securities and Exchange Commission is reportedly planning to launch an enforcement action against Empire Financial Holding Co. and its Chairman and Chief Executive Officer Kevin Gagne. Empire, which confirmed receiving a Wells notice of forthcoming regulatory enforcement, has a small window of time to construct a response before the SEC commits to a course of action. Gagne has recently taken an unpaid leave of absence until the matter is resolved.

When it comes to mutual fund reporting, transparency is the name of the game.

NEW YORK - In between good-natured gags about the "angularity" of his jaw line and quotes from Homer Simpson, New York Attorney General Eliot Spitzer told financial journalists here that despite record-breaking fines and penalties, the financial world is doomed to repeat its mistakes.

"The closer you get to the fire, the more you get burned, but that won't happen to us, because it's always been a matter of trust." -- Billy Joel

WASHINGTON -- In a far departure from the self-congratulatory back-slapping that went on at last year's Investment Company Institute General Membership Meeting, the largest mutual fund industry gathering of 2004 featured a more humble tone from the top.

WASHINGTON -- Matt Fink didn't exactly go gentle into that good night during his last days at the helm.

WASHINGTON -- Fund firms will be required to sport a chief compliance officer come October, but many gathered here at the Investment Company Institute's General Membership Meeting had unanswered questions and not a lot of time to find solutions.

WASHINGTON -- Putting the interests of investors first and fostering investor loyalty were two of primary topics at the Investment Company Institute's annual General Membership Meeting here.

A group of independent directors has formed the Independent Directors Council to provide education and create a forum to discuss policy issues. The council, an offshoot of the Directors' Committee of the Investment Company Institute, will be housed in the ICI but has its own staff.

WASHINGTON -- The Investment Company Institute and its membership are at a crossroads, said Paul Roye, the Securities and Exchange Commission's director of the division of investment management before the ICI General Membership Meeting here Thursday.

State-sponsored 529 college savings plans are the latest investment vehicle to draw scrutiny from legislators, as Congress prepares for a series of hearings to examine their fees, broker commissions and tax efficiency.

Ask your average mutual fund investor what impact the scandal has had on them, and what do you think you will hear?

The National Association of Securities Dealers has formed a mutual fund task force to recommend ways to make fund costs and distribution agreements more transparent to investors. Members of the mutual fund and broker/dealer communities will sit on the task force, which is being formed as a result of talks between the NASD and the SEC.