Fund Times: SEC Reopens Chairman Rule for Comments

The SEC said Tuesday it is reopening the comment period for the rule requiring 75% of mutual fund board members to be independent, including the chairman.

The U.S. Court of Appeals for the District of Columbia Circuit ruled in April that the SEC should give the public a chance to comment on data the commission used to estimate the costs of complying with the rules.

The SEC said it is soliciting comment on costs as well as "any issue related to the underlying purpose of the independence requirements, which is the protection of funds and fund shareholders." The solicitation is contained in a formal Request for Additional Comment approved unanimously by the five Commissioners to be published in the Federal Register.

To send a comment on the rule to the SEC, send an e-mail to rule-comments@sec.gov, and include File Number S7-03-04 in the subject line.

SEC to Fine Alger $45 Million
Fred Alger Management, Inc. said it has reached an agreement in principle with the staffs of the SEC and the New York Attorney General's office to pay $45 million relating to an inquiry into late trading and market-timing.

"The firm will consent to the payment of $30 million to reimburse fund shareholders; a fine of $10 million; and certain other remedial measures including a reduction in management fees of $1 million per year for five years," Alger said in a press release.

Corba to Pay $200,000 Penalty
Ken Corba, formerly head of PEA Capital, agreed to pay a $200,000 fine to settle charges that he made a deal with hedge fund Canary Capital Partners LLC that cheated fund investors, regulators said on Monday. (Click here for a report we filed in 2004.) At the time, PEA funds carried the Pimco label but were separate from the well-known bond group.

Corba's case was set to go to trial in a week. He also accepted a ban of at least one year on associating with an investment adviser.

Corba settled without admitting or denying wrongdoing. James Rehnquist, an attorney for Corba, said, "Mr. Corba is relieved to have put this matter behind him and looks forward to moving on."

Stephen Treadway, the former chairman of the Pimco Funds Multi-Manager series, is still set to go to trial on June 19 in federal court in Manhattan on related charges, according to his attorney.

Former Janus High-Yield Manager Launches New Fund
Former Janus manager Sandy Rufenacht is back in the mutual fund game. On June 1, Rufenacht launched Aquila Three Peaks High Income Fund. Rufenacht managed  Janus High-Yield (JAHYX) until 2003.

Riversource Gets Holistic
RiverSource launched 10 new mutual funds: eight RiverSource Retirement Plus Series target-date funds of funds, RiverSource Disciplined International Equity Fund and RiverSource Disciplined Small and Mid Cap Equity Fund.

"Our goal is to provide a holistic, value-added approach to target maturity funds - one that is new to the competitive landscape," said Paula Meyer, president of RiverSource Funds.

Blue Fund to Invest in Companies that Support Democrats
The Blue Fund Group (we're not making that up) has filed with the SEC to launch a fund that will invest in companies that support Democrats.

According to the prospectus: "The Blue Index is a market-cap-weighted portfolio of all companies in the Standard & Poor's 500 Composite Stock Price Index that both 'give blue' and 'act blue.' That is to say, the companies in the Blue Index both give the majority of their political contributions to Democratic candidates and engage in business practices consistent with what we define as progressive values�"

Although the fund is for democrats, it charges Republican prices. Its management fee is a steep 1.25% and other fees totaling 0.50% are added for a total expense ratio of 1.75%.

No word on whether Blue Fund Group managers will lob marshmallows at each other or drum on plastic pipes.