The top executive at BISYS Group Inc. says most companies that run mutual funds will be facing the same kinds of regulatory scrutiny about compensation arrangements that his company is facing.[@@]
Russell Fradin, chief executive officer of BISYS Group Inc., New York, made that prediction Tuesday during a conference call with analysts.
BISYS sells sales, marketing support and administrative support services to mutual fund companies, life insurers, banks and other financial services companies. The company bills itself as the nation’s largest independent wholesale distributor of life insurance.
BISYS has had to delay the release of its financial statements because of accounting concerns, and the U.S. Securities and Exchange Commission is investigating allegations that BISYS and advisors of some mutual funds may have made improper agreements about the use of the fees that the fund companies paid to BISYS.
Despite the investigation, “we’ve continued to win business,” Fradin said during the conference call.
Some potential customers are suffering from “frozen decision-making,” but “this is an industry issue,” Fradin says. “This isn’t a BISYS issue.”
Fradin also said that:
- BISYS began searching for a candidate to replace James Fox, the company’s chief financial officer, in January. The company announced Tuesday that Bruce Dalziel, CFO of DoubleClick Inc., New York, will be taking over as CFO.
Fradin said Fox is leaving partly because he had to commute to New York from a home in Boston every day.
“Despite his allegiance to the Red Sox, I wish him well,” Fradin said.
- Resolving the SEC investigation will cost about $25 million.
- Agreements with banks suggest that the company could release delayed financial statements and restatements Sept. 13.
- Life insurance services revenue growth will be in the “mid single digits.”
“Our initiatives to expand and improve revenue producing programs and to invest in sales force training and customer service are gaining traction,” Fradin said.
BISYS seems to be getting along better both with insurers and with producers, Fradin added.