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December 7, 2009

Past Issues

Mutual Funds

Week In Review

Circuit Court Permits 401(k) Lawsuit Against Wal-Mart to Be Heard The Eighth Circuit Court of Appeals has reversed the dismissal of Jeremy Braden v. Wal-Mart Stores by the District Court for the Western District of Missouri. The suit alleges that Wal-Mart's pension and 401(k) administrator breached its fiduciary duty by offering retail funds rather than lower-cost institutional funds, which the company could have negotiated, being of such a large size. As a result, the suit alleges, investors lost tens of millions of dollars in retirement savings.

Gross: ETFs Make Sense In the 'New Normal'

In the "new normal" that follows this recession, exchange-traded funds will be ideally positioned for a new world of lower expenses, lower returns and exposure to a wide variety of asset classes, experts say. "Bring your standards down for what you expect," said Bill Gross, managing director and co-chief investment officer of Pacific Investment Management Co., at an online webinar titled "ETF Insights" last week. A return of 3.5% isn't a lot of money, he said, but it's better than the 0.01% that some money market funds are yielding.

Regulation & Compliance

Private Funds Face Regulatory Face-Lift

While it may be too late for the Securities and Exchange Commission to pass any new regulations before the end of the year, financial experts anticipate major financial legislation and regulation to occur sometime in early 2010. The main issues facing money managers are Congressional proposals to require private funds to register with the SEC, a Supreme Court ruling on fund fees, a proposal to regulate money market funds and regulatory proposals or guidance on valuation.

Sales & Marketing

Evercore Wealth Plans to Expand; Wants $5B in Assets in 5 Years

Armed with a slew of wealth management veterans who chose to jump ship from U.S. Trust after it was acquired by Bank of America, Evercore Wealth Management has nearly doubled its assets under management to $1.4 billion in the past six months, but if that wasn't already impressive, the New York company's top executive expects to nearly quadruple that and reach $5 billion in the next five years. "We are off to a good start in a turbulent environment," said Jeffrey S. Maurer, Evercore's chairman and chief executive officer. "But I would say we'd be disappointed if we weren't at $5 billion by our fifth anniversary. Right now, it is a question of how to get there. We are going to consider organic and inorganic means."

Morningstar Publishes Credit Ratings

Morningstar has started publishing credit ratings for about 100 of the largest U.S. companies. Over the next year, it plans to produce credit ratings for up to 1,000 companies currently covered by its equity analyst team. The ratings are available for free for institutional equity research clients at its website. Morningstar is drawing on its equity research, which is has been producing since 1998, to bring a distinct perspective to debt ratings. Its equity analysts produce detailed five-year forecasts of cash flows for stock evaluation. The company then compares these forecasts with liabilities coming due to offer insight into companies' creditworthiness.

Executive Moves

Executive Moves

Fidelity Names Perold Asset Management Chief Fidelity Investments has promoted Jacques Perold from chief operating officer of its asset management unit to chief of the $1.4 trillion division. Meanwhile, Michael Wilens, the former head, has moved over to the retirement unit as director of client management, reporting to Abigail Johnson.