The Markets December 31, 2008

U.S. Mutual Fund Asset Fall Slows in November

The combined assets of the nation's mutual funds decreased by $261.65 billion, or 2.7%, to $9.355 trillion in November, according to the Investment Company Institute (ICI).
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Long-term funds—stock, bond, and hybrid funds—had a net outflow of $41.31 billion in November, compared to an outflow of $127.55 billion in October (see “Mutual Fund Assets Plunge in October“).

Stock funds posted an outflow of $21.74 billion in November, compared with an outflow of $72.44 billion in October, ICI data showed. World equity funds (U.S. funds that invest primarily overseas) posted an outflow of $8.70 billion for the month, while funds that invest primarily in the U.S. had an outflow of $13.04 billion.

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Bond funds had an asset loss of $14.51 billion in November, compared with a $40.72 billion asset loss in October. Taxable bond funds posted an outflow of $13.36 billion, and municipal bond funds posted a $1.15 billion outflow.

Hybrid funds saw an asset loss of $5.06 billion for the month, a smaller outflow than the $14.39 posted in October.

Money market funds were the only asset winners with an inflow of $122.43 billion in November, compared with an inflow of $143.52 billion in October. Funds offered primarily to institutions posted an inflow of $108.79 billion, while funds offered primarily to individuals had an inflow of $13.64 billion.

The ICI data are here.

Compliance December 31, 2008

Merrill Settles Discrimination Lawsuit

Merrill Lynch&Co. Inc. agreed Tuesday to pay $1.55 million to settle a lawsuit claiming discrimination in the firing of an analyst because he was an Iranian Muslim, Reuters reported.
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As part of the settlement with the U.S. Equal Employment Opportunity Commission (EEOC), Merrill Lynch also agreed to train its employees regarding bias based on religion and national origin, and not retaliate against workers who oppose discrimination.

The settlement resolved allegations that Merrill refused to promote and then in August 2005 fired quantitative analyst Majid Borumund because of his religion and national origin, according to the news report. Meanwhile, Merrill allegedly retained and promoted a less qualified person.

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Merrill denied the charges in the EEOC’s June 2007 lawsuit filed with U.S. district court in Manhattan.

“All individuals deserve the freedom to compete on a fair and level playing field, which did not occur in this case,” said Spencer Lewis, New York district director of the EEOC, in a statement.

According to court papers cited by Reuters, Merrill will pay Borumand $713,333 in back pay, $356,667 in compensatory damages, and $480,000 for legal fees.

The EEOC will also monitor Merrill’s compliance with the settlement, which remains in effect for two years, according to court papers.

Merrill Lynch is being acquired by Bank of America Corp.—a deal expected to close soon (see “Merrill Lynch Stockholders Approve BoA Deal’).

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