Products January 19, 2007

State Street Gives Retirees Access to Financial Information

State Street Corporation has come out with a Web-based tool that gives retirement plan participants direct and secure access to personal payment information and account transactions.
Reported by

According to a company press release, through the new tool, mypenpay.com, State Street will provide online 1099R tax forms instead of participants having to call a benefits administrator for lost forms.

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Also, the Automated Stop and Reissue function allows participants to initiate a stop payment on checks that remain outstanding for a minimum amount of days from the payable date as determined by the plan sponsor, and the Online Check Images feature provides retirees with the ability to view a front-and-back image of a paid check issued within the prior 18 months.

Compliance January 19, 2007

Fred Alger Management Settles Market Timing Case

Fund manager Fred Alger Management Inc., has agreed to a $45 million settlement of charges it engaged in a “massive″ market timing scheme that benefited favored investors.
Reported by

New York state Attorney General Andrew Cuomo said Alger will pay $30 million in restitution and $10 million in civil penalties. The firm also agreed to reduce its fees by $5 million over five years.

Cuomo said Alger consented to adopt reforms and corrective measures including:

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  • new requirements for disclosure to investors of expenses and fees,
  • new standards for board independence, greater board and adviser accountability; and
  • a commitment to hire a senior officer to ensure fees charged by the funds are negotiated at arm’s length and are reasonable.

    According to Cuomo’s statement, Alger’s prospectuses dictated a limit of six trades per year designed to prevent timing, but this was “routinely” waived for hedge funds and other big investors. For example, one timer engaged in 228 trades in 2001.

    Specifically, Alger provided two of its preferred hedge fund clients, Veras Capital Partners, L.P. and Canary Capital Partners, L.L.C., with an additional form of undisclosed special treatment by providing them material, non-public information to assist them in their trading strategies, Cuomo charged.

    In June, the company announced it would settle the charges originally brought by former Attorney General Eliot Spitzer for $41 million (See State Officials Focus on Fred Alger). The company, the state and the U.S. Securities and Exchange Commission have now agreed to the settlement.

    The company did not admit it did anything wrong. “After three and a half years, we are pleased to put this settlement behind us and move forward,” said company spokesman Jeffrey Taufield, according to an Associated Press report.

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