Law and regulation

In order to achieve meaningful reform of the financial services industry, Congress should create two key regulatory positions to oversee financial markets, according to a proposal last week by the Investment Company Institute.

Gamco has elected founder Mario Gabelli’s daughter, Elisa M. Wilson, to the board. She is a shareholder of Gamco’s privately held parent company, GGCP, and, along with her siblings, owner of the real estate partnership that leases office space to the firm. She is also president and a trustee of the charitable trust, Gabelli Foundation. Gabelli’s brother, John D. Gabelli, is also on the board.

In this brutal market, mutual funds that have kept a large stash in cash have performed best, according to Morningstar. Plus, these funds are best-positioned to take advantage of the market once it turns around. "Many of the funds that held up the best in this brutal market have one thing in common-cash," said Greg Wolper, a Morningstar analyst.

Fidelity Investments is expanding its capital markets division by 20%, or 80 positions, in trading, sales, prime brokerage and operations to serve clients trading mutual funds and hedge funds.

Reports of the death of stocks and equity mutual funds have been greatly exaggerated.

NEW YORK - The Securities and Exchange Commission has given U.S. companies more time to comment on its proposal to adopt international financial reporting standards (IFRS), but this extension may be creating uncertainty among those who thought the conversion was a done deal.

MIAMI - In their frantic efforts to cut costs, many financial services companies have been jettisoning everything that isn't absolutely necessary to stay afloat. This may work in the short term, but senior leadership is starting to realize the continued need for expertise in regulation and compliance and customer service to provide seamless risk management, transparency and communication.

Benefits consulting firms Mercer and Callan Associates are creating a mega investment consulting shop, as the two have announced plans to merge their operations.

MIAMI - With the average equity mutual fund portfolio down more than 38% in 2008, money market mutual funds are quickly becoming one of the only safe havens for risk-averse investors. Money market fund assets recently topped $4 trillion for the first time, making money funds the single largest mutual fund group, according to the Investment Company Institute.

The mutual fund industry has seen significant changes in the traditional third-party distribution model, especially this past year with the collapse of several major wirehouses and a spate of merger and acquisition activity. Alongside these changes, more broker/dealers are taking on the responsibility for recordkeeping mutual fund subaccounts.

The Investment Company Institute is pushing for improvements to municipal disclosure, which it generally considers limited, non-standardized and stale.

RiverSource Investments, American Century Investments and OppenheimerFunds have received "F" grades from a Morningstar analyst for failing to explain recent changes to shareholders and adding to the paranoia of already shaken investors.

Reports that U.S. Sens. Carl Levin's and Charles Grassley's new bill on hedge fund regulation will force funds to publicize the names of clients are untrue, the senators said.

Charles Schwab Corp. said it plans to cut 500 to 600 jobs this quarter in its effort to contain costs.

Remember when markets were rising, profits were strong and fund distribution was all about having a large wholesaling staff, generous compensation programs to incent wholesalers and support staff to track sales and calculate payouts?

The influx of money into Treasuries, combined with record-low interest rates, has driven the yields of Treasury money market funds so low that rather than risk breaking the buck, many funds are now turning away new money, MarketWatch reports.

Strong performance and a conservative approach has enabled American Century Investments to outperform some of its competitors, despite market conditions that cost it 31.4% of its assets under management last year.

Here's a word to the wise for any executives of publicly traded companies who may be about to be visited by Portfolio Manager Roger Vogel: Don't roll out the red carpet and offer him a slick, well-rehearsed tour of a spotless and smoothly humming facility.

NEW YORK - Despite the terrible news about most stocks and mutual funds, investors should heed Sophocles' warning and "don't kill the messenger."

If money managers want to invest in this highly volatile, largely negative financial environment, they must change the way they invest.