From the January 2007 issue of Investment Advisor • Subscribe!

January 1, 2007

NEWS & PRODUCTS

Bank of New York and Mellon Financial Corporation announced plans to merge. The new firm, named Bank of New York Mellon Corporation, will be New York-based and will rank number one in clearing services, issuer services, and as a global custodian, with $16 trillion in assets under custody. The combined company will have more than $1 trillion in assets under management, making it one of the top five asset managers in the U.S., and one of the top 10 globally, according to a presentation to press and analysts...

The brokerage firm Jefferies & Co. will pay $9.7 million to settle SEC charges that it illegally spent nearly $2 million in entertainment and other gifts on certain Fidelity Investments' mutual fund traders in exchange for their business. The firm also agreed to hire an independent consultant to review its compliance procedures...

The SEC, in cooperation with the Board of Governors of the Federal Reserve System, published rules to implement the bank broker provisions of the Securities Exchange Act of 1934 for public comment. A companion proposal concerning certain bank dealer activities and related matters was published for public comment as well. Banks are temporarily exempt from the definition of "broker" until July 2, 2007 to make certain that the Commission has time to consider public comment...

NASD has imposed fines totaling $850,000 against four firms--Edward D. Jones, RBC Dain Rauscher, Royal Alliance, and Morgan Stanley--for failing to have adequate supervisory systems and procedures to identify opportunities for investors to purchase Class A mutual fund shares at net asset value or without a front-end sales charge. Each firm was ordered to provide remediation to thousands of clients who qualified for, but did not receive, the benefit of available NAV transfer programs...

New York Attorney General Eliot Spitzer has sued UBS, alleging the bank defrauded thousands of its customers by moving inappropriate clients from regular brokerage accounts into a fee-based program--called InsightOne--with higher costs that was falsely promoted as providing personalized advice and other financial planning services. Since InsightOne charged its customers an asset-based fee instead of per-transaction commissions, Spitzer's office claims UBS clients paid tens of millions of dollars more in fees than they would have paid in traditional brokerage account commissions. Spitzer becomes governor of New York on January 1.

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