UPDATE: Focus on Finance

August 20, 2004

Market timing settlements; online theft

Jump to:Choose article section...Fund shareholders will get some money back The settlement scorecard Just say NO to rental car coverage Is someone cyberswiping your checkbook? Piercing the veil of secrecy at fund companies Greenbacks aren't so green anymore

Fund shareholders will get some money back

Investors in nine mutual fund companies charged with market timing abuses will benefit to the tune of $2 billion in restitution and lowered management fees under settlements reached with the SEC and the New York state Attorney General. Beginning next year, the companies are expected to return money they made by allowing privileged investors to trade rapidly in and out of their funds, at the expense of ordinary fund shareholders. Independent consultants, under federal supervision, will distribute the payments to investors according to timetables set up by the individual settlements. Market timing charges are still pending against several mutual fund companies, including PIMCO and Invesco Funds Group.


The settlement scorecard

 Restitution to investors, in millionsReduction in management fees, in millions
Alliance Capital Management$250$350
Bank of America375160
Banc One Investment Advisors5040
FleetBoston Financial14080
Janus Capital Management100125
Massachusetts Financial Services2250
Pilgrim Baxter & Associates9010
Putnam Investments550
Strong Capital Management14035

Just say NO to rental car coverage

If you have a good auto insurance policy and health coverage, you probably can skip any insurance plan offered at the car rental counter, says the Insurance Information Institute. Comprehensive and collision coverage as part of your car insurance policy means you probably won't need a collision damage waiver (also known as a loss damage waiver), which generally costs between $9 and $19 a day. You can save another $3 a day by doing without the personal accident insurance coverage if you have adequate health insurance, or have personal injury protection under your own car insurance.

If you have a homeowners or renters insurance policy, you're already covered for theft of your belongings, and can skip the personal effects coverage, which adds a buck or two to the daily bill. Credit cards also offer insurance protection, so call the toll-free number on the back of your card to see what additional coverage you can count on.

Is someone cyberswiping your checkbook?

Online theft from checking accounts is the fastest growing type of US financial consumer fraud, says a survey conducted by Gartner, an information technology research firm. Nearly 2 million adults have been victimized by online checking account theft in the 12 months ending in April, losing an average of $1,200 each. Crooks are gaining access to checking accounts through software that's unwittingly downloaded and gathers data such as account numbers and passwords.

Piercing the veil of secrecy at fund companies

Mutual fund companies have until Aug. 31 to reveal how they vote on key corporate issues, such as executive compensation, environmental decisions, and labor rights. The new SEC rule was designed to allow shareholders to monitor fund activities and to encourage funds to follow the interests of shareholders when voting on matters involving the companies they invest in. Mutual funds hold about 20 percent of all shares in US corporate stock, and thus have substantial influence on corporate policies.

Voting records must be filed every year with the SEC for all votes cast in the previous 12 months; filings will be posted at www.sec.gov. Companies also have to either make voting records available at their Web sites, or by request.

Greenbacks aren't so green anymore

Counterfeiters will soon have a tougher time plying their trade. A new $50 bill, dressed up in shades of red, blue, and silver, will hit bank counters on Sept. 28, says the federal Bureau of Engraving and Printing. The number "50" printed in the lower right corner of the bill also changes color from copper to green when the bill is tilted.

Next out will be a new $100 bill, joining the $50 and $20 in a series of newly redesigned bills. The treasury department still hasn't decided whether to redo the $5 and $10 bills, but says it definitely won't touch the $1 and $2 bills.

 

Yvonne Wollenberg. UPDATE: Focus on Finance. Medical Economics Aug. 20, 2004;81:9.