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January 4, 2010

Past Issues

Mutual Funds

Week In Review

Invesco Investors Get $418M in Fair Funds The Securities and Exchange Commission has announced the fair fund distribution of approximately $418 million to more than a million Invesco Funds investors harmed by market timing. The distribution includes $325 million in disgorgement and penalties after the Commission settled proceedings with Invesco in 2004, plus $39 million in accrued interest.

Regulation & Compliance

Bill Would Streamline Mutual Fund Tax Code

The House Ways and Means Committee has introduced a bill that would streamline and modernize the tax code for mutual funds and their shareholders. For the past 50 years, the code has been adjusted piecemeal, and an entire review of the rules hasn't occurred for more than 20 years. There are two separate rules, for example, for Form 1099, and mutual funds are still precluded from earning income from commodities.

New Rules Shift Power in Proxy Fight

The Securities and Exchange Commission has approved new rules to significantly enhance the level of information companies are required to provide shareholders in proxy statements, but many leaders worry that these changes will do little more than add to the expenses that shareholders pay. The Commission has been struggling with the complicated issue of proxy access for most of the past decade and had held numerous roundtables and rule proposals that went nowhere, before finally seizing the opportunity of the recent financial crisis to push through several big changes just before the end of the year.

Sales & Marketing

Downturn's Upside: Being Shocked Into Saving

As investors begin to regain their confidence in the market, financial advisers and mutual fund executives are beginning to map out changes in investor behavior and give the old rules some new twists. The scorched-earth mentality that permeated the investing world last year has all but disappeared, and the market rally has given investors much of their confidence back. But, as many predicted, investors of all ages have been unalterably changed. They have gained renewed respect for diversification, are grateful for even single-digit returns, and are only slowly moving back into stocks.

Ops & Tech

IFRS Puts Focus On Fair Value

As regulators work to converge U.S. Generally Accepted Accounting Principles (GAAP) with International Financial Reporting Standards (IFRS), several key differences remain, most notably the different measurement attributes of financial liabilities, the timing and approaches to projects and the difference between fair value and amortized costs. Under GAAP, investment companies like mutual funds, private equity holders and venture capital organizations are exempted from certain consolidation requirements and are allowed to account for separate fund holdings at fair value. No such exemptions currently exist under IFRS, though fair value concerns are being featured prominently in convergence discussions, and the U.S. has been adapting its rules on fair value to increase its international appeal.

Editor's Desk

2010 Will Be The Year Fund Investors Get Real

Since the recession hit two years ago, 80% of mutual fund firms have laid off tens of thousands of people, as total assets under management dropped from $11.999 trillion at the end of 2007 to $10.688 trillion as of October. In line with this 11% decline in assets, fees have undoubtedly plummeted by at least $1 billion a year. While the S&P 500 delivered a remarkable 24.9% return last year, the fact of the matter remains, the stock market is still down 30% from its peak in October 2007. This is why investors in 2009 remained stock-spooked, yanking $36 billion from U.S. equity funds and socking $357 billion into bond funds.

Executive Moves

Executive Moves

ING Financial Taps Ford As Chief Executive Officer ING Group has hired Lynne Ford as chief executive officer of ING Financial Solutions, the company's transformed annuity and rollover business.