AllianceBernstein CEO Subpoenaed

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Several former top executives at Merrill Lynch, including new AllianceBernstein CEO Peter Kraus, have been subpoenaed by New York attorney general Andrew Cuomo regarding huge payouts in 2008. Merrill Lynch paid out billions of dollars in bonuses at the end of 2008, even as the firm posted a massive fourth-quarter loss of $15.84 billion and prepared to be taken over by Bank of America BAC. Cuomo is trying to determine whether these bonuses should have been disclosed when the Merrill Lynch and Bank of America deal was reached in September, as well as whether Bank of America approved the bonus pool. Bank of America CEO Kenneth Lewis testified last week, saying he had little involvement in the process.

Merrill Lynch paid its top 10 executives a total of $209 million in cash and stock in 2008. Peter Kraus, who left Goldman Sachs to become head of strategy at Merrill Lynch in September 2008, received $29.4 million in cash and stock during his short three-month tenure, according to The Wall Street Journal. He left in December after being named CEO of AllianceBernstein, replacing the retiring Lew Sanders.

ICI Advocates Reform
The Investment Company Institute recently issued a research paper with suggestions for improving regulation of the faltering financial-services industry. The recommendations include creation of a new "Systematic Risk Regulator," or an agency designed to assess risks and promote market stability, as well as a "Capital Markets Regulator," which would broadly oversee the financial markets and set regulatory standards by melding the Securities and Exchange Commission and the Commodity Futures Trading Commission.

The ICI has also been vocal in promoting 401(k) reform to improve retirement security for Americans. ICI president and CEO Paul Schott Stevens recently testified before Congress, calling for a more stable Social Security system and increased efficiency in 401(k) plans. His suggestions included creating simpler plans, enacting automatic enrollment, improving disclosure, and encouraging workers to invest in more than just company stock.PAGEBREAK

Manager Reshufflings
Firms continue to make changes to their manager ranks as cost-cutting pressure and poor performance persist.

Bob Corman is no longer manager of Neuberger Berman Focus NBSSX, which he had run since late 2005. Corman revamped the large-blend offering after becoming director of research in 2007, making it more diversified and transitioning it into an analyst-driven fund that relies on stock picks from Neuberger Berman's analysts. The new strategy hasn't been in place long enough to make a difference, but Corman won't be around to see if it ultimately flourishes because his role--both as manager and director of research--was eliminated in cost-cutting measures. David Levine, who has been with the firm since 1995 and was named comanager of the fund in June 2008, is now sole manager.

Managers continue to move through the revolving doors at Fidelity's Select lineup. Matthew Sabel is out at Fidelity Select Health Care FSPHX after a somewhat middling two-and-a-half-year tenure. Comanager Eddie Yoon will resume full control. Yoon is an experienced health-care analyst who joined Fidelity in 2006 after several years at JP Morgan Asset Management. He will continue to run Fidelity Select Medical Equipment/Systems FSMEX. Andrew Hatem replaces Sabel at Fidelity Select Medical Delivery FSHCX after a long analyst career and stints managing Fidelity Select Air Transportation FSAIX and Fidelity Select Defense & Aerospace FSDAX.