Compliance

SCOTTSDALE, Ariz - The American Society of Pension Actuaries (ASPA) Executive Director Brian H. Graff warned the plan sponsor and retirement-services industries to jointly get their acts together and provide investors with better investment tools, or they will have Congress on their collective backs.

The clock is ticking for the Investment Company Institute (ICI), the fund industry's largest and most influential trade group, as 11th-hour lobbying efforts to stave off proxy-voting disclosure may not cut the mustard.

The B in B shares stands for "Bogus."

It takes money to make money, the adage goes, and this is no less true for the mutual fund industry. The sale of B shares requires up-front capital to compensate brokers, and at the same time generates an asset-based income stream that varies according to the fortunes of the market. To ease both of these pressures, fund companies have securitized 12b-1 fees, basically selling off that future income for a set period of time, in exchange for an up-front lump sum.

Sarbanes-Oxley? It sounds more like a debilitating disease than a remedy for corporate malfeasance.

By John C. Wilcox, Vice Chairman, Georgeson Shareholder Communications Inc.

Shareholder resolutions reached a record number this year - 862, up from 802 last year - according to a proxy season overview report by prominent activist proponents.

Funds Not Alone in SEC's New Compliance Crusade

If you are looking for corporate integrity, check out the mutual funds. In our lifetime, we have seen major scandals or collapses of the banks, savings and loans institutions, the life insurance industry, big businesses - even religious organizations.

Harvard/Templeton China Fund Fight Turns Ugly

President Bush's plans to radically change the way Americans save for retirement offer many interesting proposals, due to their simplicity and their availability for all. But it remains to be seen whether Congress will pass these sweeping changes into law.

An inadvertent administrative glitch can be a fund advisor's worst nightmare, especially when the renewal of a fund's advisory contract is botched.

Saying that the gigantic growth of the fund industry has stretched its resources to the limit, the Securities and Exchange Commission asked fund companies last Tuesday to consider appointing chief compliance officers and put internal compliance programs in writing. More significantly, the SEC asked the public and the industry to comment on the creation of a mutual fund self-regulatory organization (SRO), much like the National Association of Securities Dealers, to work in tandem with the SEC.

Let's not have another chad fiasco like the one that happened in the last presidential election.

The Securities and Exchange Commission announced last Thursday that it will require mutual funds and their investment advisors to disclose their proxy votes and have fund executives certify the accuracy of their financial statements. Subject to further review by the Office of Management and Budget, the proxy requirement could take effect as early as this summer, as the SEC is recommending annual release of this information on or before Aug. 31 of each year. The commission is recommending that fund companies have the choice of posting the files on their Web sites or making them available in hard-copy form. As to the timetable for certification, a spokesman for the SEC could not specify when the certification requirement could take effect.

Investing in a variable annuity in a tax-deferred retirement plan has long been the target of industry critics, but this month a New York law firm did more than just harp on the practice. It filed a lawsuit against it.

WASHINGTON - Securities and Exchange Commission officials intend to finalize a controversial proposal to force mutual funds to disclose how they vote in proxy decisions this week.

Securities and Exchange Commission Chairman Harvey Pitt this month urged mutual fund directors to ensure that their investors are not being overcharged by brokerage houses in the form of fees levied on securities transactions (see MFMN 1/13/03).

WASHINGTON - Four former chairmen of the Securities and Exchange Commission said last week that directors of mutual fund boards need to do a far better job of monitoring the funds they oversee and prevent the kind of fraud that has run rampant on Wall Street the past year.

Talk about going out and seeing America.