Compliance

Standard & Poor's recent research calling into question the levying of 12b-1 fees by funds closed to new investors has many in the mutual fund industry scratching their heads and poking holes in S&P's assessment.

While the Investment Company Institute and politicians are endorsing proposed legislation to reform the mutual fund industry, critics are crying foul, saying recent revisions have gutted the bill of its integrity.

NEW YORK - Despite the appearance of some hiccups, a senior annuity sales suitability model regulation will be approved in time for the fall meeting of the National Association of Insurance Commissioners (NAIC) of Kansas City, Mo.

State securities regulators are turning up the heat on Morgan Stanley after discovering it provided false and misleading information about its mutual fund sales practices.

In response to the Securities and Exchange Commission's charge that one of its representatives improperly sold mutual fund B shares and that it failed to monitor its sale of various classes of mutual funds, Prudential Securities has agreed to pay $382,000. However, Prudential neither confirmed nor denied the allegations. The settlement broke down to $300,000 in civil penalties, and $82,000 in reparations to investors reportedly hurt by the companies' conduct.

The National Association of Securities Dealers continues its slow battle against the sale of costly class B shares of mutual funds - one that began two years ago.

Freddie Mac continues to be put through the wringer after a high-profile accounting scandal forced the company to restate earnings for the last three years and led to the ousting of three top-level executives.

Industry Supports Much Of Mutual Fund Disclosure Bill

Financial services giant Citigroup is being sued by an investor who claims that she was duped into putting her money into a pricier share class of mutual funds.

DUBLIN - The retailization of hedge funds seems to be gaining momentum overseas, and international regulators are taking a cautious approach to the growing demand. But investment professionals in the U.S. are expressing little concern for, and no interest in, providing this product to the average investors.

Mutual fund investors may get a better understanding of fund costs and greater insight into the relationships and possible conflicts of interests of fund management.

WASHINGTON - Lawmakers appeared skeptical of the need to bring hedge fund products to retail investors as Securities and Exchange Commission Chairman William Donaldson presented the agency's findings from its hedge fund roundtable.

WASHINGTON - Paul Roye, the Securities and Exchange Commission's director of the division of investment management, issued a wakeup call for the mutual fund industry, telling attendees that the industry's place in the market is not assured, during remarks at the Investment Company Institute's annual convention here.

Securities and Exchange Commission Chairman William Donaldson announced last week that the comment period from the hedge fund roundtable will remain open until July 7, 2003. The public can submit materials to be included in the public record by sending them electronically to hedgefunds@sec.gov or submitting them in hard copy to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549-0609. All submissions should refer to File No. 4-476.

BERMUDA - As if raising assets in foreign markets isn't already hard enough, there are increasing regulations to contend with, as well.

WASHINGTON - Maintaining more realistic expectations about mutual fund returns will be a critical step toward rejuvenating investor confidence.

WASHINGTON - Hedge fund representatives at the recent Securities and Exchange Commission roundtable on hedge funds adamantly denied the need for increased oversight of their industry. Others at the meeting lobbied for regulators to ease current restrictions on mutual funds so that they could act more like hedge funds.

Barclays Global Investors is blazing the trail for the exchange-traded fund (ETF) business as federal regulators have lifted key investment restrictions on its iShares product.

Investors shut out of the record settlement between regulators and 10 Wall Street firms accused of gross misconduct during the fast and furious days of the bull run, can further pursue civil action against the firms, the Securities and Exchange Commission said.

Mutual funds are facing their greatest challenges in their existence. Can they remain the dominant investment of choice?