ICI sued by shareholders
From Financial Planning Interactive
A lawsuit by two shareholders accuses the Investment Company Institute of violating federal securities laws. The lawsuit alleges that ICI relies heavily on membership fees ultimately paid for by fund shareholders, but that mutual fund executives manipulate the group in ways adverse to fund shareholders. The plaintiffs further allege that the ICI has effectively become an affiliate of the advisory firms and mutual funds in the group, an arrangement forbidden by the SEC. A spokesperson for the ICI said he had not seen the suit and could not comment.
Barclays eyes bonds
From The Wall Street Journal
Barclays Global Investors is feeling its oats after the successful launch of a fleet of stock-based exchange traded funds. Now the firm is studying whether to launch the first ETFs based on bonds. Barclays has held discussions on bond-index products with several companies, including Lehman Brothers. The concept must clear structural and regulatory hurdles. Among them is whether bond-index funds would be easy enough to price and trade throughout the day to work as an exchange-traded product. It's also unclear whether a new bond index would need be needed, or whether existing Lehman indexes could be used.
From The New York Times
The SEC issued a warning that misleading tactics and incomplete disclosure about variable annuities would not be tolerated. Paul Roye said that agency was concerned that investors are being given the false impression that they're getting a free bonus. "There's no such thing as a free bonus," he said, noting that bonuses are generally tied to variable annuities with higher fees and penalties so that firms eventually get their money back. Other critics have pointed out that firms continue to receive higher fees even after they've been reimbursed. It was clear that many of the executives listening to Roye's speech feared that highlighting deceptive practices could put a crimp in the quickly growing industry.
Just out of reach
Employees want 'em, but they can't have 'em. According to Hewitt Associates, only 10% of its clients offer a technology option in their 401(k) plans. Resistance to these funds is part altruistic and part defensive. Retirement money is at issue, so sponsors don't want their plan to get too risky. They also don't want to be sued if those risky investments tank.
Stay ahead of the news ... Sign up for our email alerts now