SEC Adopts New Whistleblower Rules
June 6, 2011
The Securities and Exchange Commission has adopted rules that could reward individuals who blow the whistle on illegal activity in securities markets, with bounties on successful prosecutions.
To be considered for an award, the SEC's whistleblower program requires the individual to provide "original information" that leads to the successful enforcement by the SEC of a federal court or administrative action where penalties exceed $1 million.
Whistleblowers could be paid from 10% to 30% of the money paid in such cases.
Prior to the Dodd-Frank Wall Street Reform Act, the agency's bounty program was limited to insider trading cases, and the amount of an award was capped at 10% of the penalties collected in the action.
"For an agency with limited resources like the SEC, it is critical to be able to leverage the resources of people who may have firsthand information about violations of the securities laws," said SEC Chairman Mary L. Schapiro. "While the SEC has a history of receiving a high volume of tips and complaints, the quality of the tips we have received has been better since Dodd-Frank became law."
The SEC's rules will be effective 60 days after they are submitted to Congress or published in the Federal Register.
No-Load Shares Accounted For 47% of Sales in 2010
No-load mutual fund share classes, particularly those without 12b-1 fees, have become the single most important share class in mutual fund sales through intermediaries, according to a study by Strategic Insight.
No-load shares accounted for 47% of sales in 2010, up from 42% in 2009 and 34% in 2007. The next most popular share class was "A" shares sold at NAV, accounting for 28% of sales through intermediaries in 2010. The third-most popular share was "A" shares sold with a commission, accounting for 14% of fund sales through intermediaries in 2010.
Driving the preference for no-load shares is the growth of fee-based advisory programs that seek out lower-cost share classes. In 2010, no-load shares comprised 60% of total fee-based advisory program shares, up from 41% in 2008.
The report, "The Strategic Insight 2010 Fund Sales Survey: Perspectives on Intermediary Sales by Distribution Channel and Share Class," is based on a survey of 40 fund companies that distribute primarily through financial advisers. These companies manage $4.4 trillion in assets, representing 56% of the industry's long-term fund assets.
"Clearly, the movement toward advisers being compensated through fees-for-advice has been an important secular trend impacting fund sales for some time," said Strategic Insight Senior Analyst Dennis Bowden. "More recently, the growing demand for the lowest-cost share class within fee-based programs has added new dynamics to this trend. This demand has led to traditionally institutional share classes being made available to retail investors and advisers within fee-based programs." MME
Qoute of the Week
â€œLeading indicators are hinting at a slowdown in the growth of the U.S. economy from elevated levels at year-end 2010. The slowdown could be temporary, but the risk of a more material slowdown has increased.â€
- Jason D. Price
Director of Investment Strategy
Glenmede Investment Management