The Securities and Exchange Commission is investigating FMI Mutual Funds for possible improper trading practices, the company indicated in a regulatory filing. FMI disclosed that the Commission has opened an informal probe into a 2002 security trade by the former employer of an FMI principal. The principal and former employer were not identified, but the manager of the FMI-affiliated Cortina Funds, Cortina Asset Management, is the sub-adviser in question.

Brokerage firm A.G. Edwards announced that the Justice Department is looking into possible improper trades at the company. While the brokerage firm did not go into specifics or indicate whether it has been subpoenaed, it did admit that it could face some regulatory action for "timing transactions."

A.G. Edwards indicated in an SEC filing that it expects its revenue to decline as a result of the ban on directed brokerage by mutual fund companies. The firm did not disclose, however, how much of a decline it expects, although it did say that in combination with other regulations, the changes could have "significant and adverse" effects.

The Securities and Exchange Commission has subpoenaed Gabelli Asset Management for possible improper trading, the company indicated in an SEC filing. Last October, New York Attorney General Eliot Spitzer filed a subpoena against Gabelli, which admitted that one client had market-timing arrangements.

A federal appeals court has denied a request by the U.S. Chamber of Commerce to delay new rules requiring mutual funds to have independent chairmen. The world's largest business group had launched a campaign to postpone more stringent governance measures adopted by the Securities and Exchange Commission this past summer pending the outcome of its lawsuit challenging the move.

The National Association of Securities Dealers has fined Sentinel Financial Services Co. $700,000 and censured it for not doing enough to stop market timing in its funds. The market timing, which took place in three Sentinel Group funds, was partly a result of a shoddy supervisory system, the NASD said.

Three mutual funds have reportedly drawn the Securities and Exchange Commission's ire for alleged violations resembling the accounting sins committed by Bridgeway Capital Management. The SEC is now targeting the Putnam Research, Gartmore U.S. Growth Leaders and the WWW Internet funds for potentially erring in performance-based fee calculations. The fees in question rise and fall in proportion to a fund's ability to beat its benchmark, such as the Standard & Poor's 500 Index.

The Securities and Exchange Commission is reportedly reconsidering its proposal to require funds to impose a 2% redemption fee on shares sold within five days of purchase. Of the 280 comment letters the SEC has received on this proposal, 250 are against it, citing increased costs for investors, the difficulty of implementing since many funds are held through retirement or omnibus accounts and the inappropriateness of a government body setting fees. In fact, some at the SEC reportedly believe that requiring funds to disclose their policies to detect and prevent timing is adequate, and they are pushing to make a redemption fee optional.

It's official.

Bear Stearns is reportedly investigating whether top executives in its private-client brokerage unit approved improper mutual fund trades. According to internal documents, Bear Stearns is examining e-mails from 109 of its employees, including several firm executives. Included in that group are the heads of the private client group, Steve Dantus and Vincent Dicks. In addition, the New York Stock Exchange has asked the duo for statements.

In its initial probe of four top Canadian mutual fund firms, the Ontario Securities Commission announced that market timing did not take place. The OSC also investigated CI Mutual Funds, AIC Ltd., AGF Fund Management and Investors Group for late trading and found no instance of that, either.

J.P. Morgan Chase and Lehman Brothers Holdings have been charged in a class-action lawsuit for helping hedge fund Canary Capital Partners engage in trading violations that harmed long-term shareholders. Until the lawsuit, both J.P. Morgan and Lehman had managed to stay above the far-reaching mutual fund scandal that has tainted more than a dozen financial service firms with accusations of improper trading activities. The lawsuit was filed in federal court in Baltimore.

SAN ANTONIO -- The Investment Company Institute held its annual Tax & Accounting conference in 2003, just nine days after the scandal broke last year amid a cloud of controversy and confusion and long before the full scope of Fundgate would be realized by the industry.

The Securities and Exchange Commission has charged RS Investment Management, CEO Randall Hecht and Steven Cohen, former chief financial officer, with allowing certain mutual fund investors to market time the firm's funds. These investors profited from the trades, potentially at the expense of other shareholders, and RSIM was able to earn "substantial advisory fees."

In a year filled with securities industry scandals and settlements, the Securities and Exchange Commission has uncovered a new source of potential conflicts of interest. It could be yet another reason to expand the already overwhelming number of disclosures required of investment advisors and broker/dealers.

Having watched a number of mutual fund companies mishandle inquiries from securities regulators for the past 12 months, fund-tracking firm Morningstar knew what to do when faced with its own brush with the law.

A new bill banning the sale of a certain type of mutual fund on military bases drew unanimous support from a House panel Wednesday, as lawmakers look to protect young American troops from shady sales practices and ill-suited investment products.

The National Association of Securities Dealers has widened its inquiry into sales of 529 plans by investment advisors and brokers, more than tripling the number of firms under scrutiny to 20. The regulator began its fact-finding investigation in June of 2003 with an analysis of six large broker/dealers.

As significant federal regulation passed earlier this year begins to take effect, industry professionals are seeking greater guidance from the Securities and Exchange Commission on specific reporting mandates and examining the benefits of implementing optional requirements.

Canadian regulators announced potential enforcement proceedings against four of the largest Canadian mutual fund companies last week, as the fund industry market-timing scandal expanded north of the border.