Week in Review
December 3, 2007
SEC Permits Companies to Bar Ballot Nominations
At its open meeting on Wednesday, the Securities and Exchange Commission decided to continue allowing companies to bar shareholders from nominating directors on company ballots, although investors may continue to nominate directors or seek to change company bylaws by waging costly proxy campaigns on their own.
The three Republican commissioners voted in favor of the proposal, and the lone Democrat, Annette Nazareth, voted against it.
The SEC came out with two proxy proposals in July after a federal appeals court said the Commission cannot continue to allow corporations to exclude shareholders' proposals on proxies and must review the issue. A second proposal would have paved the way for shareholders to include proposals on company ballots, but only if they have the backing of shareholders who own at least 5% of a company's stock for a year or longer.
BoA's ATMs to Run Retirement Planning Ads
Bank of America will begin promoting its retirement products and services on its automatic teller machines in January, expanding on its print and Internet advertising campaign launched earlier this month.
BoA has the largest ATM network in the nation, consisting of 18,633 machines, but only about 10,000 of BoA's ATMs will carry the ads in five markets: Boston, Chicago, Los Angeles, New York and San Francisco.
Industry experts say banks are behind asset management firms in retirement savings, but they are optimistic they can catch up.
Bank of New York Mellon To Establish JV in China
The Bank of New York Mellon has entered into an agreement with Western Securities of China to establish an asset management joint venture, of which BNY Mellon will own 49%.
Initially, the firm, which will be called BNY Mellon Western Fund Management and headquartered in Shanghai, will invest in domestic stocks but then diversify into international holdings.
"Accelerating the already significant growth of The Bank of New York Mellon's business outside of the U.S. is our key strategic priority," said BNY Mellon Asset Management President Ronald O'Hanley. "China offers our company and our clients huge growth potential, and we are delighted to further our presence there with the formation of this joint venture. This is an exciting opportunity for our company in such an important region."
Western Securities Chairman Liu Jianwu added: "As the Chinese financial environment continues to expand and evolve, the opportunities to develop international partnerships significantly increase. We are delighted to join forces with The Bank of New York Mellon, which has considerable experience in the international asset management industry."
Citibank, BlackRock Launch 11 Funds in China
Citibank has launched 11 new mutual funds in China, in partnership with BlackRock Merrill Lynch, including one called the Merrill Lynch International Investment Funds Series that will give Chinese investors exposure to international investments, as permitted under the QDII program. To date, Citibank is offering the largest number of international mutual funds in China.
"After becoming the first bank in China to offer direct, open-end offshore mutual funds under the QDII scheme in August, today's launch is another example of Citibank's commitment to provide varied and innovative product selections to our Chinese customers," said Anand Selva, executive vice president in the consumer group at Citibank (China). "We have chosen to partner with one of the world's largest asset management companies, BlackRock, to bring 11 specially selected fund offerings to the China market."
Portus Manager Pleads Guilty, Gets Two Years
In a surprise twist in the trial of Michael Mendelson, one of the two managers of the collapsed Canadian hedge fund Portus Alternative Asset Management, he reached a plea agreement by pleading guilty and testifying against his former partner, Boaz Manor, the Edmonton Journal reports. Still, Mendelson was sentenced to two years in prison.
Mendelson apologized for defrauding 26,000 investors of $761 million, saying to Ontario Court of Justice Judge Robert Bigelow, "I want to say, your honor, to anyone negatively impacted by the creation of Portus that I deeply apologize."
Bigelow evidently took some pity on Mendelson, noting that he had received numerous character letters on his behalf. The judge said the former hedge fund manager "has clearly accepted responsibility for what has occurred. The likelihood that [Mendelson] will be before the courts again is almost nil," the judge said.
The investors will get approximately 96% of their money back. Mendelson pocketed nearly $23 million from the fund, $17 million of it in cash and diamonds that have not been found.
Emerging Markets Begin To Show Signs of Strain
The mortgage fallout in the U.S. is beginning to take its toll on international markets, including the emerging markets that have delivered such stellar returns of late, Barron's Online reports. That's because investors are moving away from any investment they perceive as carrying risk.