SEC Makes Terrorism-Link Info Available to Investors

The Securities and Exchange Commission (SEC) has added to its Web site a tool that permits investors to obtain information directly from company disclosure documents about their business interests in countries the U.S. Secretary of State has designated “State Sponsors of Terrorism.″
According to the announcement, the online information comes from the companies’ most recent annual reports as filed with the SEC. “No investor should ever have to wonder whether his or her investments or retirement savings are indirectly subsidizing a terrorist haven or genocidal state. The law already requires companies to report on any material activities in a country the Secretary of State has formally designated a State Sponsor of Terrorism. Our role is to make that information readily accessible to the investing public,” said SEC Chairman Christopher Cox, in the announcement.
Users can go to the Investor Information section of the SEC’s home page and click the tab for “State Sponsors of Terrorism’ to see a menu of terrorism-sponsor countries. Clicking on any of those countries will bring up a menu of the companies whose 2006 annual reports disclose business activities in that country, the SEC announcement said. By clicking on the name of a company users will be linked directly to pertinent portions of that company’s annual report.
The Web site will be continuously updated to reflect the receipt of new SEC filings or changes to the Department of State’s list of countries.

John Hancock Settles on Failure to Disclose Revenue Sharing

The Securities and Exchange Commission (SEC) on Monday issued a settled order against certain investment advisers and broker-dealers owned by Manulife Financial Corporation and John Hancock Financial Services, Inc., relating to charges of failure to disclose revenue sharing agreements.
According to a statement from the SEC, Manulife and John Hancock, which merged into one complex in 2004, violated federal securities laws from at least 2001 until as late as 2004 when investment advisers failed to disclose their use of brokerage commissions to pay for their affiliated distributors’ marketing expenses concerning the sale of mutual fund and variable annuity products. The Commission’s order censures each of the entities and requires each of them to cease-and-desist from committing or causing certain violations of federal securities laws and to undertake certain compliance reforms, the statement said.
As part of the settlement, the firms agreed to pay, in total, $19,287,880.95 in disgorgement, which will be distributed to the affected funds, and a $2 million penalty.
According to the SEC, John Hancock Investment Management Services, LLC (known during the relevant period as Manufacturers Securities Services, LLC) and John Hancock Advisers, LLC directed brokerage commissions from transactions in trust portfolios and retail mutual funds they advised to pay for marketing expenses their affiliated distributors incurred under the distributors’ own marketing arrangements with broker-dealers. The commissions were trust portfolio and retail mutual fund assets, and were in addition to the distribution-related expenses that the variable series trust and mutual fund boards had authorized, but the investment advisers did not disclose to the trust or retail mutual fund boards the use of these assets to pay their affiliates’ revenue sharing obligations.
The firms that distributed the Manulife Financial variable annuity products and John Hancock’s retail mutual funds, negotiated and were obligated under the marketing arrangements, so they knew or should have known the advisers failed to disclose the revenue sharing obligations, the SEC said.
The firms consented to the settlement but neither admitted nor denied any wrongdoing.

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