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Regulation & Compliance

Run on Money Funds Ends, But Investors Shift From Prime to Treasuries

September 29, 2008 - Investors poured $19.64 billion into money market funds Wednesday, $26.2 billion Tuesday and $1.5 billion Monday, after yanking $186.6 billion, or 6.1%, out of money mar¬ket funds the five business days prior, according to Crane Data. By comparison, money market funds had given up just over $7 billion the pre¬vious week. Money fund assets, currently at $3.398 trillion, according to the Investment Company Institute, remain up by $178 billion, or 8.1% year-to-date and still show a huge increase-$529 billion, or 18.4%-over the trailing 52 weeks. The run on money market funds that had the Federal Reserve warn¬ing that credit markets were in danger of freezing up worldwide, appears to be over.

International Accounting Standards Increase Equity Values, Liquidity

September 22, 2008 - Expect a pop in equity valuations, increased liquidity and lower trading costs as U.S. and foreign corporations list stocks using International Financial Reporting Standards (IFRS). That's according to a working paper published by the University Of Chicago Graduate School Of Business. The Securities and Exchange Commission proposed late last month that U.S companies will have to use IFRS reporting standards as opposed to our Generally Accepted Accounting Principles (GAAP) in the near future. The SEC would permit some multinational companies to report earnings based on the international standards in 2010 and by 2014 require U.S. companies to use the IFRS standards.

Funds Face Tax and Accounting Challenges

September 22, 2008 - CHICAGO - In the coming weeks and months, financial officials and members of Congress will be scrambling to revisit a spate of sunsetting tax and accounting laws before the new presidential administration and Congress take over next year. Planning future tax laws is like playing a game of chess: You want to think several moves ahead, while continually adjusting to immediate threats and crises as they pop up.

What Fund Execs Need to Know About New Investor Privacy Regs

September 15, 2008 - Identity theft, data loss and other privacy violations are among the leading threats faced by financial institutions. Depending on their nature, they can inflict reputational and brand damage, cause revenue losses and prompt civil liability suits by customers. What's more, regulators are taking an increasingly hard line in these matters. Two new regulatory measures to safeguard investor privacy have far-reaching implications for investment companies, and executives need to take steps to comply. The first measure, the 'Identity Theft Red Flags' rule, was issued by the Federal Trade Commission in November 2007. It has been discussed largely in terms of its impact on banks and credit and debit card issuers.

Cox: SEC to Propose New Disclosure Rules On Municipal Bonds

September 15, 2008 - The Securities and Exchange Commission plans to propose as early as the end of the month rules that would enhance municipal disclosure, SEC Chairman Christopher Cox said in an interview. The proposals will be aimed at implementing some of the municipal securities initiatives outlined in a 2007 white paper that can be accomplished without congressional authorization, Cox said. They would also come on top of rule changes the Commission proposed in July to establish a central disclosure repository called Electronic Municipal Market Access, or EMMA, that will be run by the Municipal Securities Rulemaking Board.

Republicans Favor McCain As Market, Industry Ally

September 8, 2008 - MINNEAPOLIS - Sen. John McCain is the better choice for the financial services industry not for what he would do as president, but rather for what he would refrain from doing, GOP lawmakers said here this week during the Republican National Convention. Several legislators contrasted the Arizona Republican's generally hands-off approach to market volatility with what they expect would be a hefty list of reforms that could hurt banks and other financial companies if Sen. Barack Obama won the election.

Industry Roils Against Critical Fund Book

September 8, 2008 - An obscure book about mutual funds has begun to arouse the ire of the industry. Louis Lowenstein's book, 'The Investor's Dilemma. How Mutual Funds Are Betraying Your Trust and What To Do About It (Wiley, 2008),' levels some serious charges about the self-serving interests of investment companies. Lowenstein, who has widely written on the financial markets, is the Simon Rifkind Professor Emeritus of Finance and Law at Columbia University. The book slams mutual funds.

403(b) Overhaul First Since 1964

September 8, 2008 - AUSTIN, Texas - Making sure your company's 403(b) retirement plan is in compliance by Jan. 1, 2009 can be a daunting task, especially if you haven't gotten started yet. The new regulations by the Internal Revenue Service and Department of Labor loom as a ticking time bomb to some plan sponsors and vendors prone to procrastination, but IRS officials say the changes are meant to improve the plans, not frighten employers. 'We have no intention of going out and doing an extensive number of audits next January, nor do we have plans to increase the number of 403(b) audits we're doing now,' said an IRS official, who asked not to be identified, in an interview with MME.

Industry Braces for New 403(b) Regs

September 8, 2008 - AUSTIN, Texas - New 403(b) regulations are coming, whether or not plan sponsors and vendors are ready for the changes. 'This is different from anything we've ever done before,' said Tom Peller, vice president of compliance for Fidelity Investments, at the SPARK Institute's 403(b) Plans Issues and Answers Forum here last month at the Hyatt Regency hotel. 'In the past, when you had to do compliance, it was linear. You just checked things off one thing at a time. Almost all the changes in 403(b) regs are interconnected. Everything you change will impact something else. Your approach should be very different.'

SEC Dedicates Website To Anti-Money Laundering

August 18, 2008 - The Securities and Exchange Commission has opened a website originally created for internal purposes at the Office of Compliance Inspections and Examinations to fight anti-money laundering, for compliance officers at mutual funds. The AML Source Tool for Mutual Funds website gives fund executives a one-stop overview on how to combat anti-money laundering.

Facebooks for Financial Services

August 18, 2008 - Ever since those first gatherings under a buttonwood tree, the business of Wall Street has been highly social, with personal contacts, access to information and networking abilities playing a crucial role. Now, several companies are taking a page from social networking websites like Facebook and seeking to move some of those activities online.

With Good 401(k) Planning, Everybody Wins

August 18, 2008 - In addition to helping employees save for retirement, a solid 401(k) plan can help companies to attract, motivate and retain good workers, enhance a company's corporate reputation and contribute to the long-term financial success of the business, according to a new study by Charles Schwab. Among the findings, 95% of financial executives consider their company's matching contributions to be an important feature of the plan, but they still see room for improvement in making a better partnership with employees, according to the study, 'A Shared Benefit: Employer Views on the Value of 401(k) Plans.'

Companies Gear Up For XBRL Reporting

August 11, 2008 - The Securities and Exchange Commission could mandate the use of eXtensible Business Reporting Language (XBRL) in mutual fund risk return summaries by as early as the first quarter of next year, according to industry experts, putting many fund companies on the data-tagging fast track. XBRL US, the U.S. version of the international consortium, has joined forces with Andover, Mass.-based mutual fund data provider NewRiver to make sure public companies, mutual funds and credit rating agencies are ready in time.

SEC Helps Boards Get Over The Enigma of Trades

August 4, 2008 - The Securities and Exchange Commission issued guidance last week for fund boards of directors in assessing their firm’s soft-dollar practices. The SEC said it was issuing the guidance a full two years after the limitations it put on soft dollars in 2006, restricting it only to research, due to rapidly evolving market and trading practices. True enough, there are wide discrepancies among brokerages today, due to rapidly evolving markets, trading practices and electronic crossing networks. Fund companies have until Oct. 1 to comment on the SEC’s guidance. The Commission outlines numerous considerations for boards, which must rely on reports from top management, auditors, counsel and chief compliance officers in assessing day-to-day trading systems.

ICI Asks SEC to Expand Credit Rating Rules

August 4, 2008 - WASHINGTON — The Investment Company Institute last Monday urged the Securities and Exchange Commission to expand its proposed credit rating agency rules on structured products to include municipal securities, and to increase the secondary market disclosure requirements for the municipal market. The ICI said that the SEC’s proposed rules that would require credit rating agencies to disclose conflicts of interest highlight similar disclosure issues in the municipal market. In addition, the ICI said, the Commission’s proposal to take references to certain ratings out of its rules will put the onus of credit analysis more squarely on fund companies and other investors that will, in turn, need more up-to-date disclosures from municipal issuers.