Lehman confirms SG Cowen purchase
From New York Times
It's official. As had been rumored, Lehman Brothers Holdings said yesterday that it had bought SG Cowen's private client business. Neither firm disclosed terms of the deal. Lehman will take about 130 SG Cowen brokers with 60,000 clients and roughly $10 billion in assets. The move marks a reversal of recent trends as a U.S. based company is purchasing the unit of Frances Société Générale.

Fund raters more closely tied to funds
From TheStreet.com
How independent are fund raters such as Morningstar and Lipper? The article points out that these firms, and other ratings agencies, have growing business relationships with many of the companies whose funds they evaluate. Revenues come from items that investors may not be aware of, such as fees for performing 15(c) analyses for fund directors. "Relying on the industry for a whole lot of their revenue has an effect on their willingness to do anything radical," Mercer Bullard, former assistant chief counsel in the SEC's investment-management division who now heads an advocacy group for mutual-fund investors, is quoted as saying.

Funds of best picks are a hit
From Wall Street Journal
While the edgy startups such as MutualMinds.com and Marketocracy are tapping amateur investors to pick stocks the established Wall Street firms are finding that taking the pros' best ideas also has appeal. At Goldman Sachs a new fund using this concept -- Research Select -- has experienced the best launch in the history of the firm. In a little more than a month it has taken in $250 million. Other firms with similar funds include PaineWebber Group Inc. and Morgan Stanley Dean Witter & Co.

The creator of ETFs profiled
From San Francisco Chronicle
Did you know that the creator of the exchange-traded fund got his start trading safflower seeds and coconut oil futures? That he later developed a product that helped save the American Stock Exchange from oblivion. That he is 86? Nathan Most, the subject of this two-part series is credited with creating a "mutual fund revolution". Most is now a consultant with Barclays Global Investors. Sources credit his creation as springing from Most's commodities background as vice president of finance and head of safflower seed trading for Pacific Vegetable Oil and a coconut oil trader on the Pacific Commodities Exchange. The profile details Most's travails with the SEC -- "It took us three years to get exemptions to the 1940 Act," -- and creating a way to keep the NAV and trading price in synch (he invented the "creation unit"). Most is confident of the power of his creation saying "ETFs would have displaced mutual funds long ago ... if there had been the computing power we have today. Now that we have the computing power to buy the basket (of stocks) with a single command, I think these (ETFs) will replace closed-end funds first and then we will be hitting the mutual funds." Most also told the writer that he's working on a way to create ETFs for actively managed funds, but he won't disclose any details.

New ETFs based on Fortune indices
From Wall Street Journal
State Street Corp.'s is planning to launch two new exchange-traded funds based on the Fortune 500 and the Fortune e-50 Index. The new funds will be launched later this year. Fortune adds that the publisher is open to licensing the indices for conventional mutual funds.  

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