Investment News articles from January 2003

Investment News archives from January 2003

J.P. Morgan Chase to merge bond ops. (At the Bell).
January 6, 2003... J.P. Morgan Chase & Co. in New York will merge its North American investment-grade and high-yield bond sales, trading and research operations. There are a total of 150 professionals in the divisions combined. No job cuts are expected. The deal...

IRA withdrawal rule may fall by wayside. (At the Bell).
January 6, 2003... Rep. Jim Saxton, R-N.J., has proposed legislation to repeal the requirement that mandatory withdrawals be taken from traditional individual retirement accounts starting at age 70 1/2. Mutual fund companies strongly support the legislation. Many...

PwC plans to hold clients accountable. (At the Bell).
January 6, 2003... PricewaterhouseCoopers LLP is getting tough. The nation's largest accounting firm is pitching a new way of doing business. It now promises in full-page newspaper ads to "ask the tough questions and tackle the tough issues." And if its auditors...

What's in a name? (At the Bell).
January 6, 2003... A proposed new uniform state securities law would leave it optional for states to decide whether to define variable insurance products as securities. The proposal, drawn up by the National Conference of Commissioners on Uniform State Laws in...

Grubman gets gang-tackled: damage claims to be filed on masse before NASD.
January 6, 2003... Tarnished telecom stock analyst Jack Grubman is facing an unprecedented legal assault as part of a strategy to collect damages for errant stock picks that cost investors tens of millions of dollars. Plaintiff's lawyer Robert Weiss of...

Barring unexpected, modest recovery seen: uncertainties temper optimism for rebound. (2003 Economic Outlook).
January 6, 2003... After muddling last year through an economy that showed all the symptoms of an anxiety disorder, investors can look forward to a modest but strengthening recovery in 2003. Real gross domestic product is widely expected to climb by between...

Bill would hike SEC budget. (At the Bell).
January 6, 2003... Legislation that would put funding for the Securities and Exchange Commission at $776 million for the fiscal year that began Oct. 1, 2002, was introduced last week. The funding level would increase the SEC'S budget by 42% from its current level...

Errata.
January 6, 2003... * A Dec. 23 story misspelled Robert Balentine's name and name of the Wilmington Trust Corp. subsidiary he heads, Balentine & Co. * The following correct, clarify or augment information in the Dec. 23 DataBook: In the REIT chart on Page...

Fuel cells aren't yet heirs to the Internet. (Monday Morning: Insights & Analysis).
January 6, 2003... The last big idea that spawned an investing frenzy was the Internet. So what will be the hot concept for this decade? We are now three years into it without a clear winner. The leading candidate seems to be genetic engineering, but a...

Not on our watch, House members say. (Short Interests: Tips, Trends & Observations).
January 6, 2003... Leaders of the House Financial Services Committee last Tuesday got wind of alleged overcharging of mutual fund investors by brokerage firms, and they aren't happy about it. "We are greatly concerned that fund investors may have been...

Make money, not (Korean) war: fund managers bullish despite nuclear crisis.
January 6, 2003... Judging by the rhetoric pouring forth from North Korea's capital, Pyongyang, war appears to be a distinct possibility. But the saber rattling and grave pronouncements aren't spooking money managers yet. "The Korean market has performed...

Tao of Dow: stock index may plunge; correction could be around corner. (2003 Economic Outlook).
January 6, 2003... The Dow Jones Industrial Average may no longer be the "safe haven" index it was through much of the bear market. While most market prognosticators see near-term opportunities for small- and mid-cap stocks, Cincinnati-based market analyst...

Dividend tax repeal could be a double-edged sword: stimulus may hurt muni, treasury bonds.
January 6, 2003... President Bush's centerpiece proposal to pump up the economy could kick the wind out of municipal bonds at a time when local governments are reeling. And some think the plan will shoot Uncle Sam in the foot as well. The cause for...

President Bush thinks ahead to 2004. (The Week in Review).
January 6, 2003... It looks as if somebody is getting worried about an impending election. President Bush on Tuesday proposed a 10-year, $674 billion "growth and jobs" plan to lift the economy out of the gutter by abolishing the taxes investors pay on...

Flush it away. (The Week in Review).
January 6, 2003... When business goes down the toilet, get rid of the plumber! Credit Suisse First Boston Corp. on Wednesday agreed to sell its trade-processing unit to The Bank of New York Co. Inc. for $2 billion in cash. The sale of Jersey City, N.J.-based...

New job description. (The Week in Review).
January 6, 2003... The SEC did more than play musical chairs last week. On Wednesday it unanimously approved a proposed rule change that basically would force corporate audit committees to do their jobs. The proposed rules would require audit committees to...

Temp help. (The Week in Review).
January 6, 2003... Take a chair... but don't get used to it. On Wednesday, Charles Niemeier, former chief accountant of the Securities and Exchange Commission's enforcement division, was named acting chairman of the Public Company Accounting Oversight Board....

Funds' penny-pinching squeezes little guy: fidelity latest to hike minimums for IRAs.
January 6, 2003... Fidelity Investments is getting in touch with its inner skinflint. In a year-end filing with the Securities and Exchange Commission, the Boston-based fund giant hiked the minimum initial investment on an individual retirement account to...

M&A pace expected to pick up.
January 6, 2003... After declines in the number and value of financial services mergers and acquisitions last year, investment bankers expect a pickup in 2003, though nothing dramatic. Bankers say they expect to see the most M&A activity around banks,...

Bush's dividend tax repeal mis-sold and misdirected. (Editorial).
January 6, 2003... President Bush last week made the repeal of dividend taxes for investors one of the hallmarks of his 10-year, $674 billion economic stimulus package, and already it has become a lightning rod on Capitol Hill. Although it's the costliest...

For Greenspan, the string is running out: in uncertain times like these, investors should hope for the best but prepare for the worst. (Opinion).
January 6, 2003... After the Federal Reserve cut interest rates 11 times in 2001, Chairman Alan Greenspan must have felt as if he had been pushing on a string, with the economy again sputtering and unemployment rising. Those rate cuts seemingly hadn't...

Correspondence.
January 6, 2003... CFP holders' ranks are on the march. The Certified Financial Planner Board of Standards Inc. applauds the support InvestmentNews provided for the Financial Planning Association's requirement that all financial planner members have...

Our experts' crystal ball was cloudy for 2002. (2003 Economic Outlook).
January 6, 2003... Predicting where the major stock indexes are at the end of the year may come down to savvy analysis or just a lucky guess. Whatever method advisers and money managers employed in 2002, most were dead wrong. Of the 14 soothsayers...

Equity fund expenses. (The Markets).
January 6, 2003... Equity fund expenses For returns, Third World funds are second to none EMERGING MARKETS LOWEST COST EXPENSE 1-YEAR ASSETS FUND RATIO RETURN ($M)...

Color Peerless Systems primed for opportunities. (Commentary).
January 6, 2003... Peerless Systems Corp. (PRLS) is looking at a rainbow of new business opportunities with a recent product launch and some deeper penetration into the Asian markets. The El Segundo, Calif, developer of digital-imaging software has...

Investment Watch. (The Markets).
January 6, 2003... At a glance: InFocus Corp. 2001 revenue: $760.6 million 2000: $886.7 million 2001 earnings: $20.2 million 2000: $51.9 million 52-week high: $22 52-week low: $4.22 P/E: N/A Price/book: 0.80 Market cap:...

Record number of funds bit the dust in 2002: liquidations, mergers hit more than 1,000.
January 6, 2003... The ferocious bear market chewed up and spat out more mutual funds than ever before in 2002. A record 373 funds were liquidated, representing 2.7% of all the funds in Morningstar Inc.'s universe, according to the Chicago fund tracker. That...

"A 4% to 5% return for bonds over the next year or so is still quite attractive". (One on One).
January 6, 2003... For years and arguably decades, William H. Gross has been the most successful bond manager in the United States. The former math whiz, card shark and U.S. Navy pilot wannabe has turned all his capabilities and thwarted ambitions into the...

Biggs to retire at Morgan Stanley. (At the Bell).
January 20, 2003... * Chief global strategist Barton Biggs, 70, is retiring from Morgan Stanley after 30 years with the New York investment bank. The top-rated market watcher will run a new independent firm, Traxis Partners, which will manage a hedge fund...

So-so 4Q likely for online brokers. (At the Bell).
January 20, 2003... * Securities companies with large online-investing operations will likely see a mixed bag for fourth-quarter earnings. "Quarterly online trading volumes should be flat to up modestly from the third quarter," says Richard Repetto, an analyst at...

State Street deal clears EU hurdle. (At the Bell).
January 20, 2003... * The European Union Commission Friday approved the purchase by Boston-based State Street Corp. of parts of Deutsche Bank AG'S Global Securities division. The deal is worth up to $1.5 billion, and will create the world's largest custodian of...

Securities group likes stimulus plan. (At the Bell).
January 20, 2003... * The Security Traders Association Friday expressed strong support for President Bush's proposed economic stimulus package. "We are especially supportive of the president's proposal to eliminate the double taxation of corporate dividends," said...

Stock-option reform fizzling: fewer companies are volunteering to expense the cost.
January 20, 2003... The push to expense stock options flashed through corporate America last year like a sudden summer storm: It was intense but short-lived. In all, 89 companies, from The Coca-Cola Co. to The Washington Post Co., vowed to voluntarily expense...

Red-tape riot afoot at NASD: small firms may offer board candidate slate.
January 20, 2003... It looks as if David is challenging Goliath to a grudge match. Some executives of small brokerage houses, stung by the recent issuance of a spate of compliance initiatives, are even more fed up with NASD, the industry's self-regulatory...

AmEx enhances adviser website. (At the Bell).
January 20, 2003... * American Express Financial Group in Minneapolis has enhanced its website at americanexpress.com/aefg. The redesigned hub features AccessAEFG, a password-protected service portal for the unit's sales representatives. Through the hub,...

Consumer index down in January. (At the Bell).
January 20, 2003... * Consumer confidence levels slid in the middle of January amid growing uncertainty about the direction of the economy. The University of Michigan's midmonth report on consumer sentiment indicated that consumer confidence for January had...

N.J. to add cash to pension fund. (At the Bell).
January 20, 2003... * New Jersey plans to add $750 million to its pension system in next year's budget to make up for massive losses in U.S. markets during the past two years. "We are working with the actuaries to determine the best way to deal with the pension...

Nasdaq CEO against options expensing. (At the Bell).
January 20, 2003... * Hardwick Simmons, chairman and CEO of The Nasdaq Stock Market Inc. in New York, is opposed to the expensing of stock options. Options plans work to align corporate interests with shareholder interests and build incentives for employees, Mr....

Ruminations on an exciting five years. (Insights & Analysis).
January 20, 2003... When my in-laws retired to Vero Beach about 15 years ago, my wife and I began making frequent trips to that well-heeled community on Florida's Treasure Coast. In the mid-1990s, I began to notice wealth management offices popping up on the...

Smooth sailing for Morningstar cruise. (Tips, Trends & Observations).
January 20, 2003... Although many cruise ships are suddenly morphing into the S.S. Stomach Bug, Morningstar Inc. is going full speed ahead with its plans to sail the Caribbean. Next month, the Chicago-based fund tracker will hold its third annual investment...

Don't be fooled. (Tips, Trends & Observations).
January 20, 2003... Even a blind squirrel finds a nut sometimes. How else can you explain the fact that the $1 million American Heritage Fund was up 42.86% year-to-date as of last Wednesday, placing it in the first percentile of its world-stock category? ...

Adviser bait. (Tips, Trends & Observations).
January 20, 2003... Rydex Funds in Rockville, Md., last week filed with the Securities and Exchange Commission to offer a registered hedge fund pegged to the S&P Hedge Fund index. The new Rydex Capital Partners Sphinx Fund, expected to be available in April,...

For sale to highest bidder: eBay-like site to auction shares in hedge funds.
January 20, 2003... Imagine seeing an ad for a "pre-owned" hedge fund partnership in excellent condition, with great performance, low fees and lots of extras: "Make an offer. Must sell." While the evolution of alternative-investment sales hasn't quite reached...

Big Conseco creditors get a leg up: only major banks and bondholders likely to recover much.
January 20, 2003... Only the biggest of Conseco Inc.'s 146,000 creditors -- major banks and bondholders -- are likely to recover much from the collapse of the Carmel, Ind., insurer. Spanning 3,336 pages, the master list of creditors of Conseco and its lending...

Advisers yet to shine on Morningstar: tough market slows growth of portfolios.
January 20, 2003... Morningstar Inc.'s venture into the asset management business has gotten off to a slow start. But the executive in charge of the program isn't discouraged, citing the tough market. "I think a lot of retail clients are just sitting on...

Exit, stage left: Case of the merger blues. (The Week in Review).
January 20, 2003... Anyone looking to hire an out-of-work visionary? Last Thursday, four days after America Online founder Steve Case said he would resign as chairman of AOL Time Warner Inc., the embattled firm said that chief executive Richard Parsons would take...

Dying dream. (The Week in Review).
January 20, 2003... * It looks like we can kiss goodbye any hope of a technology rally in 2003. While IBM Corp. and Microsoft Corp. on Thursday posted December earnings that met or beat analysts' expectations, both also offered gloomy outlooks for 2003. As a...

Tougher stance. (The Week in Review).
January 20, 2003... * Memo to accountants: Check your creativity at the door. The Financial Accounting Standards Board of Norwalk, Conn., which sets accounting convention in the United States, Wednesday approved tougher rules for the use of special-purpose...

Not to be outdone. (The Week in Review).
January 20, 2003... * There are lots of phrases to describe the Securities and Exchange Commission these days. But none, perhaps, better than this: a day late and a dollar short. The commission voted unanimously last Wednesday to crack the whip on misleading...

Advisers keep eye on fund overcharges: some brokerages don't pass along savings.
January 20, 2003... When it rains, it pours. Another scandal maybe brewing as the Securities and Exchange Commission and NASD investigate allegations that brokerage firms overcharged commissions on mutual fund sales. Last month, the Washington regulatory...

After five years in business, basking in the 'sweet spot'. (Editorial).
January 20, 2003... Compared with all the scandals, high-powered mergers and the rise and fall of the Internet economy, one trend has unfolded with very little fanfare over the past five years. Yet when all is said and done, the industry's steady if tectonic...

Yes, (asset) size really does matter. (Correspondence).
January 20, 2003... In reading Rick Miller's Dec. 16 Monday Morning column ["Does size matter (when it comes to assets)?"], I was astounded that any financial adviser would take offense about being quizzed on the size of his assets under management, since that,...

Groundwork was laid for a true profession: industry gained cachet, adherents. (Financial Planning).
January 20, 2003... Financial planners just want a little respect. Changes in the financial planning industry during the past five years have set it on course to becoming a recognized profession on par with certified public accountants and lawyers. ...

From intoxication to a hangover: New Economy yielded to realities of market. (The Economy).
January 20, 2003... For anyone who thinks not much has changed in five years, try listening for these two words around the water cooler: "New Economy." It used to be that everyone was talking about how information-age advances in productivity would push the...

Sweeping regs altered the financial landscape: SEC increased adviser oversight. (Legislation and Regulation).
January 20, 2003... It is enough to make your head spin. The scandals that came to light during the market implosion of the past five years have resulted in what has been called the most sweeping regulatory restructuring since the 1930s. The impact of the...

Losers outnumbered a few big gainers: Dynacq, up 3,000%, is an exception. (The Stock Market).
January 20, 2003... If ever there was an argument for buy-and-hold investing, it is found in a company such as Dynacq International Inc. (DYJI). With its share price up nearly 3,000% over the five years through Jan. 10, the Pasadena, Texas, operator of...

Distribution has become the name of game: shift from direct sales to intermediaries. (Mutual Funds).
January 20, 2003... It is all about distribution. The industry has been preoccupied with moving from direct sales to marketing through intermediaries, says T. Neil Bathon, president of Financial Research Corp. in Boston. That is the impression some...

Looking askance at five years of highs and lows. (Dubious Achievements).
January 20, 2003... During the tech stock boom and the 10-year bull market, anything seemed possible, and almost anything went. Needless to say, some often resorted to extreme -- extremely funny that is -- behavior, at least in retrospect, to get an edge on the...

Switch to fee-based advice dominant trend: brokers act more like financial planners. (Broker-Dealers).
January 20, 2003... Hindsight, they say, is 20/20. Back in 1999, veteran registered representative James Wozniak began charging fees for his services instead of taking commissions. At the time, the bull market was a year shy of running its exuberant...

Russell report.
January 20, 2003... Russell report Only value and midcaps are alive after five (years) Total U.S. equity returns for periods ended Dec. 31 TOTAL MARKET GROWTH Blue-chip U.S. stocks Russell Top 200 Russell Top...

"We estimate the growth rate based on [return on equity] and earnings retention". (One on One).
January 20, 2003... When Irene G. Hoover was a high school history teacher in the late 1960s, she became fascinated with the stock market. That early interest led to a 30-plus-year career in investment management that has been influenced by both history and...

Lawyers: margin loans abused; arbitration cases target use for stocks and home mortgages.
January 27, 2003... A common Wall Street practice to encourage clients to take out margin loans has come under fire from plaintiff's lawyers who claim brokers put their own financial interest ahead of their clients'. To boost margin-loan business, the lawyers...

Analyst conflict regs may hit advisers, too: FPA, some securities lawyers sounding alarm.
January 27, 2003... Financial advisers who send out client newsletters are concerned that they may soon be subject to the rules that apply to research analysts. The Financial Planning Association and some securities lawyers in Washington are sounding alarms...

Fidelity honcho plans to focus firm inward: reliance on advisers to be de-emphasized.
January 27, 2003... A new sheriff is taking over at Fidelity Brokerage Co. but don't expect to see financial advisers heading up the posse. Ellyn A. McColgan, president of the unit since October, says that independent advisers will continue to play a key --...

NASD scrutinizing hedge fund sales. (At the Bell).
January 27, 2003... * NASD is concerned that some brokers aren't making balanced disclosures to retail investors about the risks of hedge funds. NASD, which recently reviewed the sales practices of brokers who sell interests in hedge funds and funds of hedge...

Cotsakos resigns as E*TRADE CEO. (At the Bell).
January 27, 2003... * Christos Cotsakos, 54, resigned as CEO of E*TRADE Group Inc. Friday. The company's board of directors didn't elaborate on the move. Analysts say he was sunk by the nearly $60 million he took home in compensation last year as the Menlo Park,...

Month's notice set on 401(k) blackout. (At the Bell).
January 27, 2003... * Pension plan administrators must notify workers no less than 30 days before the start of any blackout period for their 401(k) plans, according to rules issued Friday by the Department of Labor. The action is required under the Sarbanes-Oxley...

Mergerstat sells operations unit. (At the Bell).
January 27, 2003... * FactSet Research Systems Inc, a Greenwich, Conn., financial data supplier, completed the purchase of the database collection operations of Mergerstat Holdings LP, a Santa Monica, Calif., provider of mergers and acquisitions content.

Fund investors: advice is worth it. (At the Bell).
January 27, 2003... * About 43% of mutual fund investors believe the advice of a financial adviser is worth the cost, according to a survey by American Century Investment Management Inc. in Kansas City, Mo. The December survey of 526 mutual fund investors released...

Wolfgruber named Oppenheimer CIO. (At the Bell).
January 27, 2003... * OppenheimerFunds Inc. in New York has named Kurt Wolfgruber chief investment officer. Mr. Wolfgruber has been with Oppenheimer since 1993. Most recently, he was the company's senior investment officer and director of domestic equities.

Corrections.
January 27, 2003... * A quote was attributed incorrectly last week in an article on Morningstar Investment Services Inc.'s managed-portfolio program. It was Wayne Bloom, principal at CommonWealth Financial Network, who said: "We're really excited about [the...

Dividend taxes give pause for thought. (Insights & Analysis).
January 27, 2003... President Bush created a hot topic for discussion when he proposed ending the double taxation of dividends by making dividends received by investors exempt from income taxes. Obviously, tax exemption of dividends would be a boon for...

Funds ride names to outperformance. (Tips, Trends & Observations).
January 27, 2003... Of the 500 largest equity mutual funds, all 16 that carry their managers' names outperformed the Standard & Poor's 500 stock index last year, Barry Glassman says. Fifteen of the 16 surname funds that are ranked in the top 500 by assets...

Schwab is game. (Tips, Trends & Observations).
January 27, 2003... Financial services firms largely stayed away from Super Bowl advertising this year, except for Charles Schwab & Co. Inc. In one tongue-in-cheek 30-second spot, a desperate man is being chased down by the mailman who in the end is just...

Ratings lowdown. (Tips, Trends & Observations).
January 27, 2003... Mutual fund rating services such as Morningstar Inc. in Chicago and Value Line Inc. in New York have long said that people shouldn't invest in funds based on their ratings alone. Boy, were they ever right. None of the rating systems from...

SEC flips big wigs on fund proxies. (The Week in Review).
January 27, 2003... Even a very public display of solidarity between the chairmen of the nation's two largest mutual fund companies wasn't enough to persuade the Securities and Exchange Commission to keep investors in the closet with regard to proxy voting. ...

Shed no tears. (The Week in Review).
January 27, 2003... * This is one of those situations where you don't know whether to laugh or cry. New York State Comptroller Alan Hevesi said Thursday that bonuses paid by Wall Street banks and brokerages totaled about $7.9 billion in 2002, down 37% from...

Tech tribulations. (The Week in Review).
January 27, 2003... * These days, it seems like the only kind of technology that many portfolio managers at Fidelity Investments are comfortable with is a Palm Pilot. Judging by a report released by the Boston-based fund giant on Monday, many of Fidelity's...

Reporting woes. (The Week in Review).
January 27, 2003... * Sometimes you win and sometimes you lose. J.P Morgan Chase & Co. Inc. on Wednesday posted a $387 million loss in the fourth quarter, thanks to increased severance expenses and charges related to the collapse of Enron Corp. Meanwhile,...

Ordered into court. (The Week in Review).
January 27, 2003... * The time has come for Citigroup chairman and chief executive Sanford I. Weill to get his day in court, whether he likes it or not. Mr. Weill has been ordered to give a deposition in a class-action lawsuit brought against Citi's Salomon...

All may not be fair in fund valuation: a quarter of firms could need attention.
January 27, 2003... Despite the concerns of federal regulators, new valuation procedures are now in place at a majority of mutual fund companies, a new study indicates. The study conducted last summer by Deloitte & Touche LLP in New York found that only about...

Will settlement money reach bilked investors? It is key to restoring confidence, Oxley says.
January 27, 2003... The chairman of the House Financial Services Committee wants to make sure defrauded investors get some of the money regulators will soon be raking in. In a Jan. 15 speech to The Heritage Foundation, a free-market think tank in Washington,...

Fizzled option reform points to need for accounting rule. (Editorial).
January 27, 2003... In the wake of the Enron, World-Com and other corporate scandals, the heat for corporate reform last summer was as intense as the blazing sun on a steamy afternoon. That led to something almost as remarkable as a snowstorm in July. A host...

It's survival of the fittest for independents: some smaller firms at risk despite gains made in 2002. (Broker Dealers).
January 27, 2003... Executives at some leading independent broker-dealers say investors are increasingly walking out of wirehouses and regional firms and into their brokers' offices, looking for shelter from the savage bear market. Clients are attracted to...