SEC LOOKING AT MFS MARKET TIMING

NY POST ^ | December 9, 2003 | JENNY ANDERSON

[Liz]

The Securities and Exchange Commission has told Massachusetts Financial Services, the 11th-largest mutual fund company in the United States, that it could face civil charges for failing to disclose market-timing practices.

The firm - a subsidiary of Canada's Sun Life, which has $348.5 billion in assets under management - is the latest in the $7 trillion industry to be named in the ever-widening investigation into improper mutual fund trading practices. Regulators including the SEC and New York Attorney General Eliot Spitzer are examining both late trading and market timing.

[Grampa Dave]

I get confused as the various reporters add their personal spin or newspaper spins to what the charges are.

[Grampa Dave]

The Clintoons during the Clintoon year had this virus that they transmitted to their powerful friends.

That virus believed in absolute power and that nothing was wrong in maintaining that absolute power. They even had the Wookie Jake Reno who made sure there was no "Controlling Legal Authority"!

Now there is a controlling legal authority. As usual the virus spreaders, the Clintoons, continue to be free, and their friends take the fall due to the Clintoon Virus that infected them.

[SierraWasp]

FDR had one thing right! Fear is the most infectious virus that feeds on it'self to create it's own downward spiral!!!

Fear, turned into a phobia, can be terminal to a society.

[Grampa Dave]

Fear is a self fulfilling prophecy.

If you are afraid that you will fail and believe that you will fail. You will usually fail.

[trad_anglican]

I get confused as the various reporters add their personal spin or newspaper spins to what the charges are.

It's pretty confusing the way it gets reported. In this case, MFS seems to have all but invited market timing in 11 of its funds. Their take is that, due to the size and liquidity of those funds, the extra trades didn't generate extra expenses so the shareholders weren't hurt.

The problem is that they didn't update the prospectus' for these funds to reflect the policy. The prospectus' had blanket prohibitions of market timing. Now the prospectus' say market timing isn't allowed if it disrupts trading or harms shareholders. Had they changed the wording in the prospectus' of the 11 funds on a timely basis, they wouldn't be in trouble.

[Grampa Dave]

Thanks for the feedback.

If those funds were in an Ira or 401k, the investors probaly haven't been hurt except for a temporary dip like when Putnam had to cash out billions for people and others rolling over their investments.

However, if an investor had those funds in a non deferred tax account, he/she might have been killed with taxes on profits that they never got. I think that is one of the hidden stories on these scams.

[anniegetyourgun]

Agreed. Hope springs eternal that all this stuff will be exposed. It's amazing to me that confidence is still high. Perhaps because it's too confusing for the average investor or little guy with a fund.

[Grampa Dave]

Even with Putnam, Janus and Strong, our strong markets have made those funds winners inspite of the churning, timing and only God knows what.

The average Jane or Joe investor could care less if their 401k goes from Putnam to Fidelity, Vanguard or whatever. Their funds in the new funds will be similiar to what they left behind.

Here is another reason why average Jane or Joe investor is not that upset:

Mortgage Delinquencies Fall to 3-Year Low!
Reuters | December 09, 2003 12:42:00 PM ET


Posted on 12/09/2003 10:12:44 AM PST by Steven W.


NEW YORK (Reuters) - U.S. mortgage delinquencies during the last quarter declined the most in more than a decade, a trade group said on Tuesday in the latest sign the world's biggest economy is on the mend.


The Mortgage Bankers Association said the percentage of outstanding mortgages that were delinquent fell to 4.28 percent in the third quarter, the lowest level in three years, from 4.62 percent in the second quarter.


The strengthening economy should result in lower delinquencies and foreclosures in future quarters, said Doug Duncan, chief economist at the trade group.


The percentage of home loans in foreclosure in the third quarter held at 1.12 percent, unchanged from the second quarter.


But the percentage of home loans entering foreclosure rose to 0.38 percent from 0.32 percent in the second quarter, suggesting the percentage of loans going bad could tick a bit higher next quarter before declining, Duncan said in a conference call with reporters.


The economy grew at its fastest pace in two decades during the third quarter and is adding jobs after the labor market stagnated for three years.


The extent to which strong growth can be sustained is still the subject of debate. But if the economy grows at a 4 percent rate next year, as the MBA forecasts, then rising income growth and employment should translate to slower delinquencies, Duncan said.


The percentage point decline in delinquencies for one-to four-unit residential mortgage loans in the third quarter was the biggest since the first quarter of 1990.

[a_Turk]

This means that whoever has money left in Putnam will lose it if they don't pull out right away, right?

[Grampa Dave]

No, those funds are invested in stock. If the stock does okay, the funds will do okay. In fact that might be a safe place for the money until an appropriate company is found to roll over your/their money.

What causes these funds to go down is the massive sell offs of stock to cash out mutual fund share holders so they can roll that money over to another company.