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25 April, 2012 - Niels Holch

The March 30 decision by the 8th Circuit Court of Appeals in the Gallus advisory fee case was a relief for many in the mutual fund industry. The Court ruled in favor of Ameriprise Financial and this case is now essentially over. However, fund boards need to remain vigilant on excessive fee issues, as the SEC may be picking up where the plaintiff’s bar is leaving off.

 

In its decision in Gallus, the Court of Appeals determined that the advisory fee review process used by the Ameriprise fund board was “robust.” It also concluded that the lower court’s review of the disputed...

30 January, 2012 - Niels Holch

On January 30, 2012, the Coalition of Mutual Fund Investors (CMFI) released a study on the costs and expenses of investing in Section 529 college savings plans. Using public information, this CMFI study compared the fees and costs of making mutual fund investments in a state 529 plan directly, with the fees and costs of making the same investments in a state 529 plan through a financial intermediary, such as a broker-dealer or a financial advisor.

 

CMFI’s study concluded that the fees and costs of investing in the state 529 plans through a financial intermediary are, on...

01 September, 2011 - cmfi

On September 1, 2011, CMFI submitted a comment letter to the Municipal Securities Rulemaking Board (MSRB) about Section 529 College Savings Plans.

 

The purpose of this comment letter is to inform the MSRB about a new recordkeeping practice that is being promoted by large broker-dealers to increase the fees that they can charge for services rendered to Section 529 Plans.  This recordkeeping practice--called omnibus accounting--has recently been implemented for the Virginia College Savings Plan.  And discussions are underway to expand the use of...

25 August, 2011 - cmfi

On August 24, 2011, the Ninth Circuit Court of Appeals handed down an unpublished opinion in the American Funds fee case. The Court upheld the dismissal of the case by the District Court, holding that the Gartenberg standards were correctly applied. The Court noted that the standards did not change under the recent ruling by the Supreme Court in Jones v. Harris Associates, which confirmed these legal standards for a fiduciary duty case under Section 36(b) of the Investment Company Act.

 

While the District Court was critical of the oversight role of...

21 January, 2011 - cmfi

On January 21, 2011, the Coalition of Mutual Fund Investors (CMFI) submitted a comment letter to the SEC, regarding potential money market fund reforms.

 

Last fall, the President’s Working Group on Financial Markets released a study of possible reforms to mitigate the susceptibility of money market funds to “liquidity runs.”  The SEC then asked for public comments on the study and the regulatory options presented.

 

The CMFI comment letter expresses support for the creation of a private liquidity bank and urges that additional measures be...

19 November, 2010 - cmfi

On November 19, 2010, the Coalition of Mutual Fund Investors (“CMFI”) submitted a comment letter to the Securities and Exchange Commission (“SEC”), regarding its proposal to restructure Rule 12b-1 and the fees charged to mutual fund investors for sales, distribution, and related activities.

You can click on the following link to read this CMFI comment letter: http://www.investorscoalition.com/CMFI_Letter_to_Elizabeth_Murphy.pdf

CMFI advocates that the SEC broaden its proposed framework...

18 August, 2010 - cmfi

The Coalition of  Mutual Fund Investors (CMFI) has uncovered several practices being used by large broker-dealers to increase their revenues from mutual fund activities. CMFI estimates that these practices are imposing annual costs on individual investors of as much as: (1) $2.2 billion in account maintenance charges, (2) more than $4.18 billion in shareholder servicing payments, and (3) more than $2.09 billion in revenue-sharing payments.

On August 18, 2010, CMFI released a White Paper which explains in greater detail these broker­ dealer practices and...

23 February, 2010 - cmfi

On February 23, 2010, the Securities and Exchange Commission ( 'SEC" ) posted new money market fund rules on its website  Click on the following link to review this 220-page document: http://www.sec.gov/rules/final/2010/ic-29132.pdf.

 
As a result of the financial crisis, the SEC is amending its current money market fund rules to make these funds more resilient to short-term market risks and to improve investor protections.

 
One of the provisions in the SEC' s  proposed rules...

13 October, 2009 - cmfi

On October 13, 2009, the Coalition of Mutual Fund Investors (CMFI) released a new study examining the payments being made by mutual funds to third-party financial intermediaries for shareholder servicing and recordkeeping activities.
 
This CMFI study concludes that as much as $9.6 billion in excess fees are being paid each year for servicing activities within hidden accounts managed by these financial intermediaries.  This excess cost is adding approximately 25 basis points to the average shareholder's account.
 
Remarkably, the payments...

10 September, 2009 - cmfi

On September 10, 2009, the Coalition of Mutual Fund Investors (CMFI) sent a comment letter to the Securities and Exchange Commission (SEC), regarding proposals by the SEC to reform its money market fund rules.
 
The CMFI comment letter advocates that the proposed rule amendments include a provision that requires full transparency in third-party hidden accounts, so that money market funds can evaluate liquidity risks at the investor level more accurately and on a real-time basis.
 
Click on the following link to review this CMFI comment letter to...