Scudder v. Hoffman
From Morningstar
Scudder Kemper is suing Robert Hoffman, former manager of Scudder Growth & Income, for allegedly violating the terms of a noncompete agreement. Hoffman left Scudder in January to start a hedge fund. According to the lawsuit, Hoffman, had signed a noncompete agreement restricting him from soliciting Scudder employees for a one-year period. But this spring, Suzanne Twitchell and Christopher Coleman left Scudder and to join Hoffman's new company. Scudder hopes to resolve the dispute through arbitration, according to Dow Jones news reports. But if similar lawsuits are any guide, the battle will probably be a long one.

Like a rock
From The Wall Street Journal
Despite record volatility, 401(k) participants are staying calm. Early in the year, investors responded to market volatility by increasing the number of fund exchanges within their retirement plans. But recent market throes have not led to increased movement of assets, according to The Hewitt 401(k) Index. Lori Lucas, a consultant at Hewitt, said, "More recently, they are either becoming more immune to [volatility] or they simply don't know what to do." One reason 401(k) investors may be cool is that they aren't exposed to the most-volatile fund categories, such as technology or biotechnology. Typically, 401(k)-plan participants are restricted to eight to 10 broadly based funds.

Pasive can be good
From The Boston Globe
State Street is making a name for itself in the field of passive investing. At the company's annual meeting yesterday, chief Marshall Carter spoke about the growing index investments by money management subsidiary State Street Global Advisors. Pensions and Investments reported that the top 10 passive managers serving institutions won a combined $89 billion in new business over a 12-month period ending in November, and State Street claimed 47% of it. Part of their success is due to the small number of competitors. "There are really half a dozen serious competitors and two super giants, Barclay's and State Street," said David Brief, director of research at Capital Resource Advisors in Chicago. "Those two 800-pound gorillas are going up against each other constantly." The downside for State Street is that fees they can charge are much lower than active-management fees.

Stuart still under scrutiny
From Morningstar
The NADSD is taking a hard look at fund advertising that trumpets spectacular returns, especially returns based on initial public offerings. Last week, the group issued a notice reminding fund companies not to create unrealistic expectations of future performance. NASD rules require that firms shouldn't omit material if the omission could cause ads to be misleading, that no fraudulent claims be made, and that all information, including disclosures, be presented clearly. 

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