Law and regulation

Merrill Lynch formally agreed to a $40 million settlement to a class action lawsuit brought by two of its former advisors regarding their deferred compensation on Friday, a decision that will potentially impact more than a thousand advisors with production levels of $500,000 and less.

ICI President and CEO Paul Schott Stevens said the "exhaustive record" before the SEC did not support the changes that it was proposing.

Merrill Lynch is expected to head into a New York court Friday and hammer out a settlement that could potentially affect the deferred compensation of thousands of financial advisors that have left the firm since its 2008 combination with Bank of America.

The asset-management industry scored a victory when SEC Chairman Mary Schapiro abandoned her quest to impose tougher rules on money-market mutual funds, but some expect the celebration will be brief.

Here is the text of the statement by Securities and Exchange Commission Chairman Mary Schapiro on money market mutual fund reform.

Mary Schapiro, Chairman of the U.S. Securities and Exchange Commission, canceled a vote on a proposal to tighten money-market fund rules amid opposition from fellow commissioners and a lobbying campaign by fund companies.

The SEC rolled out its first whistle-blower award on Tuesday, a $50,000 payment to an anonymous informant who helped bring down a Ponzi scheme. So far, the government has recovered $150,000.

A dozen luminaries of the financial world, including former Fed Chairman Paul Volcker, have signed a petition calling on lawmakers and regulatory authorities to expand the scope of fiduciary responsibilities to encompass more segments of the investment advisory industry.

The nonpartisan Congressional Budget Office said today in a biannual analysis that the shortfall will be about $100 billion narrower than it had projected in March. The deficit would be less than last year's $1.3 trillion, in part because tax revenue has risen by almost 6 percent and spending is down by about 1 percent this year.

The measure of success for Christopher Donahue's defense? That the SEC so far this year has not sought a showdown on reform.

For roughly 40 years, the SEC has clashed in a "regulatory tug-of-war" with Congress over regulation of borrowers of conduit bonds, which historically have higher default rates than traditional munis, said Paul Maco, a lawyer at Bracewell & Giuliani LLP.

Big businesses' mixed feelings about their large bank partners are especially obvious when the conversation turns to proposed reforms of money-market funds, which corporate treasurers say could increase the power of "too big to fail" banks.

In a new survey, the CFP Board revealed just how pervasive the financial abuse of seniors has come to be. At the same time, the board is seeking new standards to help seniors - and all consumers - better understand which self-described financial advisors are truly out to serve their best interests.

In the first of what the SEC hopes will be many more such awards, a whistleblower has received $50,000 for his or her help in stopping a multi-million dollar fraud. More money may be forthcoming for the individual if other, related cases move forward. The first award comes about a year after the whistleblower program began operating.

In a surprise move, incoming National Association of Personal Financial Advisors Chairman, Ron Rhoades, said that because of a compliance violation by his firm he will not be assuming the helm of the advocacy group on September 1 as anticipated.

The SEC announced fraud charges and an emergency asset freeze against a Denver-based company and two Colorado residents for allegedly carrying out a $15.7 million Ponzi scheme that dragged in more than 120 investors nationwide.

FINRA says the brokerage didn't have enough controls in place to detect that Jared Weinryt had breached his $116 million trading limit as he made overnight bets on so-called futures.

RIA in a Box's registration maintenance service focuses on turning down an RIA's panic level from surprise regulatory visits.

Wells Fargo & Co. agreed to settle charges that its brokerage and a former vice president sold securities it didn't understand to municipalities, non-profit organizations and other customers.

As sales of ETFs boom, the SEC's Office of Investor Education and Advocacy has released an investor bulletin on the investment vehicle.