Products February 17, 2011

BNY Mellon Launches Total Emerging Markets Strategy

Standish Mellon Asset Management Company LLC and The Boston Company Asset Management (TBCAM) are jointly managing the Total Emerging Markets strategy. 
Reported by

The two asset management firms are investment boutiques of BNY Mellon Asset Management. The Total Emerging Markets strategy is an actively managed strategy that seeks to create a diversified portfolio comprising the most attractive opportunities in emerging markets bonds, equities, and currencies.

Within this new strategy, Standish and TBCAM will share asset allocation and country selection decisions. Standish will select fixed income securities and make currency management decisions with TBCAM handling equity selections.  

“We have designed the Total Emerging Markets strategy so it can seek better risk-adjusted and absolute long-term performance than traditional emerging markets equity portfolios benchmarked against the MSCI EM Index,” said Alexander Kozhemiakin, who leads the emerging markets fixed income team at Standish.  

In contrast to a traditional emerging markets equities-only portfolio, the Total Emerging Markets strategy is designed to encompass an expanded investment universe and should benefit from a greater degree of country diversification, as the equity and fixed income universes in emerging markets only partially overlap, according to the announcement.  

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Compliance February 17, 2011

FINRA Slaps Lincoln Companies with $600K in Fines

Inadequately protecting confidential customer information was the reason behind the fines.
Reported by

The Financial Industry Regulatory Authority (FINRA) brought the fines against Lincoln Financial Securities, Inc. (LFS) and Lincoln Financial Advisors Corporation (LFA). A FINRA news release said LFS was sanctioned for not forcing brokers working remotely to install security software on their personal computers used to conduct firm business. FINRA said LFS was fined $450,000 and LFA $150,000.

FINRA and the Securities and Exchange Commission (SEC) require broker/dealers to safeguard customer records and information.

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From 2002 through 2009, between the two firms, more than one million customer account records were accessed through the use of shared user names and passwords, FINRA said. Since neither firm had policies or procedures to monitor the distribution of the shared user names and passwords, they were not able to track how many, or which employees, gained access to the site during this period.

As a result of the weaknesses in access controls to the firms’ system, confidential customer records including names, addresses, social security numbers, account numbers, account balances, birth dates, email addresses and transaction details were at risk, FINRA charged.

FINRA alleged the Web-based system both firms used combined non-public customer account information from various sources and allowed employees to view the customer account information within a single site. Home office personnel from both firms could access the system either by clicking on a link on the firm’s Web site or could gain access through any Internet browser by going directly to the system’s Web site and logging in with one of the shared user names and passwords.

FINRA also found that LFS and LFA did not have procedures to disable or change the shared user names and passwords on a recurring basis even after a home office employee had been terminated. Many individuals left the two firms during the time period involved in the charges, yet the shared user names and passwords were never changed, and the firms had no way of determining whether former employees continued to access confidential customer information using those same user names and passwords. 

In settling these matters, LFS, based in Concord, New Hampshire, and LFA, based in Fort Wayne, Indiana, neither admitted nor denied the charges, but agreed to the entry of FINRA’s findings.

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