It was not the best year for the fund industry.
Last year saw the equity markets rebound after a three-year
funk. But that is not what 2003 will be remembered for in the
annals of fund history. Instead, the most lasting impact it
will likely have on the industry came in September, with the
onset of the fund trading scandal.
From then on, 2003 — for the fund business and the changes
wrought upon it — was defined not by industry executives, who
have yet to provide significant leadership in this crisis.
Rather, the players who exerted the most influence in the fund
industry were whistle-blowers, state officials, legislators
and shareholder advocates.
They are the ones who brought the abusive practices in the
industry to light, and they are shaping the industry’s
response to the scandal. Their actions will determine the
rules by which the fund industry will probably have to live
for years to come. For that reason, they are the Fund Titans
of 2003.
Whistle-blower Noreen Harrington got the ball
rolling on the current fund scandal. She took a serious
professional risk by tipping off Eliot Spitzer’s office about
the abusive fund trading practices at her former employer,
Stern Asset Management.
Love him or hate him, New York attorney general Eliot
Spitzer’s investigation has ushered in a new era of reform
for the fund industry. In September, as part of his $40
million settlement with Canary Capital, he blew the lid off
the market-timing and late-trading abuses at a number of fund
firms. The revelations in that settlement have forced
legislators, investors and industry executives to look at the
fund business with new eyes.
Congressman Richard Baker first sponsored the Mutual
Funds Integrity and Fee Transparency Act in June of this year.
It had all but died in the House by August. But in the wake of
the fund scandal, the bill was revived, and Baker led the
charge on what is the first legislative response to fund
trading abuses. The bill passed the House 418-2 in November,
and some say it could pass the Senate as early as July of this
year.
Shareholder advocate Mercer Bullard and his
organization, Fund Democracy, were fighting for industry
reform long before Eliot Spitzer and Senator Richard Baker
took up the cause. While Bullard has had some success forcing
various reforms, the revelation of trading abuses in the fund
business has raised his credibility to new levels. Now,
lawmakers, regulators and the fund industry are looking to him
for guidance and hoping to sway his opinion.
How the Fund Titans were chosen: The reporters and editors
of Ignites.com asked a range of industry experts to
name the people whose contributions had left a significant
mark on the industry in 2003. This year’s Titans were selected
from that list of nominees.
Contact
Colin Dodds at cdodds@ignites.com>
