Compliance

At least two fund groups have now experienced, firsthand, the impact of new requirements mandated with the enactment last year of the Sarbanes-Oxley Act. That legislative enactment aimed, among other things, to stem corporate fraud and make top executives accountable for the accuracy of financial reporting.

Even with the recent scandal unfolding in the fund industry, the Mutual Fund Integrity and Fee Transparency Act of 2003 is heading for its twilight rather than the limelight, industry observers said.

Those who have maintained the holier-than-thou attitude of the mutual fund industry and have believed that this scandal, too, shall pass, shouldn't kid themselves. It's time for the industry to turn in its halo.

Insidious greed notwithstanding, corporate governance is the Achilles heel of U.S. public companies. The analyst research scandal, the collapse of Enron and WorldCom and alleged illegal trading practices in the mutual fund industry all could have been prevented had there been sound corporate governance teams in place.

A Baltimore court has reportedly ordered Legg Mason to pay newsletter publisher Lowry's Reports $20 million for sharing one paid $700 subscription to Lowry's Market Trend Analysis with more than 1,300 employees over the company's intranet.

Alliance Suspends Two in Fund Timing Investigation

Hedge funds have long been dampened by the perpetual rain cloud of suspicion looming overhead, but several in the industry see regulators' proposals last week requiring advisors to register as investment advisors with the Securities and Exchange Commission as a welcome ray of sunshine. Some even likened the proposals to a symbolic "Good Housekeeping Seal of Approval."

The winds of change are sweeping the floor of the New York Stock Exchange, as federal regulators look to overhaul the world's biggest marketplace.

Industry-wide late processing of mutual fund trades has some in the industry worried. The practice is commonplace and perfectly legal, so why the concern?

Ahhh, there's nothing like a good scandal to fuel additional prospectus disclosures being pushed out to financial advisers and investors.

The Securities and Exchange Commission approved a new rule requiring mutual fund companies to provide more balanced information in their advertisements when promoting fund performance.

ORLANDO, Fla. - Compliance automation is necessary in this day and age, but it's no way to shrink the bottom line, said experts speaking on the Investment Company Institute's Tax and Accounting Conference panel on using technology for compliance and disclosure.

BoA Broker Faces 25 Years In Prison in Canary Caper

ORLANDO, Fla. - As New York State Attorney General Eliot Spitzer continues to focus on fund executives who have broken the oldest rules in the books, others in the industry gathered at the Investment Company Institute's Tax and Accounting Conference here last week to try and figure out how to comply with some of the newer regulations.

Bank of America has been busy doing damage control in the wake of New York State Attorney General Eliot Spitzer's probe into its and four other fund companies' trading policies. The bank has fired Robert Gordon, director of mutual funds, and two other top salespeople named in Spitzer's complaint, including Theodore C. Sihpol III, a broker who worked in BoA's New York office for high-net-worth clients, and Charles Bryceland, head of brokerage and private banking. Broker Mike Tierney and sales supervisor Kathy Tubiolo have also been let go. Rich DeMartini, head of asset management and also named in Spitzer's suit, had not lost his job as of press time.

Spitzer Probe Could Derail Janus Capital's Rebound

Sarbanes what? The landmark legislation passed last year in response to rampant accounting misdeeds has disappeared from the headlines but continues to be a thorn in the side of fund executives and accounting personnel.

It's open season on the mutual fund industry, as New York State Attorney General Eliot Spitzer's probe of mutual fund trading practices has triggered a barrage of investor lawsuits.

Tongues are wagging and fingers are pointing.

Fear and greed are what drives Wall Street. Just because the mutual fund industry serves the higher calling of providing for the retirement security of 95 million Americans, it appears to be no better than the next hypocritical analyst, commission-hungry trader or manipulative investment banker. Greed is greed. Even in the fund industry.