CROOK NEWS: SEC Is Probing Banks' Influence On Mutual Fund Share Purchases
By DEBORAH SOLOMON Staff Reporter of THE WALL STREET JOURNAL
May 12, 2004; Page C1
WASHINGTON – Securities regulators are examining whether investment banks have been pressuring affiliated mutual funds to buy shares of initial public offerings and stock in companies with which the bank has a relationship, according to people familiar with the matter. The Securities and Exchange Commission wants to determine if banks have been trying to curry favor with corporate clients by getting affiliated funds to load up on a company's IPO or its outstanding stock in an effort to drive up the price. While SEC officials say they have no evidence yet this is occurring, they are concerned that the potential for conflict exists. The agency is conducting a broad review into conflicts throughout the mutual-fund industry, including abusive trading practices by fund managers and undisclosed payments made to brokers in exchange for steering investors to certain mutual funds. The SEC and other agencies have found evidence of widespread problems throughout the $7 trillion fund industry.
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