Compliance

House Passes Baker Bill, Updated to Address Scandal

Think mutual fund investors are the only ones trying to decipher which sponsors have been naughty and which have been nice?

WASHINGTON - Testifying before the Senate Banking Committee last week, SEC Chairman William Donaldson called for the formation of a new risk assessment unit to circumvent abuses in mutual funds and other investments.

Members of the House of Representatives voted overwhelmingly (418-2) Wednesday to approve the Mutual Funds Integrity and Fee Transparency Act, also known as the Baker Bill.

Federal Reserve Chairman Alan Greenspan and U.S. Treasury Secretary John Snow on Tuesday called for swift punishment for individuals convicted in the widening mutual fund scandal, Reuters reports.

Fund managers placing their own interests ahead of those invested in the funds.

Brace yourselves. Recent problems in the mutual fund industry with market timing arbitrageurs could spill over into the variable annuity industry.

The mutual fund industry, while still viable and in position to bounce back, needs drastic changes and needs them now, Securities and Exchange Commission Chairman William H. Donaldson said in a sometimes scathing, sometimes positive speech.

NASD Probes B/D Sales Of College Savings Plans

Fund industry executives who thought they might dodge the scandal bullet had their odds reduced drastically last week.

WASHINGTON - The crusade against mutual funds for ripping off customers is reaping benefits as Congress prepares to draft new legislation to curtail trading abuses and protect shareholders.

The Investment Company Institute's top officials presented ideas to the Senate and the Securities and Exchange Commission last week to fix the problems of late-trading, market timing and insider market timing. But they might soon need to add accurate NAV pricing to the list, as SEC Director of Enforcement Stephen Cutler testified before Congress last week that some funds are also guilty of purposely writing down their net asset values.

The National Association of Securities Dealers at press time was reportedly investigating Prudential Securities for potential late trading out of the company's Boston office.

Alliance Capital and Deutsche Bank are two other giants that New York's top regulator may come down on next, according to reports last week.

Strong Financial Chairman To Face SEC, State Charges: Wisconsin Also Joins Fray

A headache for the mutual fund industry has developed into a migraine as Putnam Investments and two of its portfolio managers have been accused of market timing their own funds.

The fund industry's most prominent shareholder advocate is urging Congress to create an oversight board to protect mutual fund shareholders from fraud.

Half of the companies that the Securities and Exchange Commission has contacted with regards to improper trading have reportedly admitted wrongdoing. Forty-four of the 88 companies who've received letters from the SEC have allowed some form of market timing - including firms whose own policies clearly disallow the practice. Not as many companies have admitted to late trading, however.

If the Securities and Exchange Commission approves a filing by DTCC, the not-for-profit clearing and settlement giant, best known for its work for the mutual fund industry, it will be able to do the same for separately managed accounts.

NEW ORLEANS - Regulators at the Investment Company Institute's Operations Conference here, in the crescent city, said they will be focusing more on electronic communications and management's attitude towards internal controls as they go forward, in an attempt to be more proactive in examining firms' internal controls.