Compliance June 22, 2007

Pension Fund Files Complaint Against Adviser

The Delray Beach, Florida, police and fire pension board voted Wednesday to sue its former financial consultant if no settlement can be reached regarding trading fees the broker gained from the fund.
Reported by
The South Florida Sun-Sentinel reports that the pension board agreed to give Smith Barney a chance to negotiate a settlement on the undisclosed fees. Edward Siedle, an independent investigator who initiated the review of Delray Beach’s account, estimated the amount due to the fund was close to $2 million, the news report said.
Smith Barney and other financial firms with pension consulting divisions have been under scrutiny recently for simultaneously providing consulting and broker services for pension boards. The firms are advising the pension boards on which money managers to use while collecting commissions from trades made by many of those managers – a relationship the U.S. Securities and Exchange Commission (SEC) declared a conflict of interest in a 2005 staff report.
According to the Sun-Sentinel, in 2006 Smith Barney acknowledged that for eight years it inaccurately reported the Delray Beach fund’s performance to the board by excluding trading fees in performance reviews. Officials from both the Delray Beach and West Palm Beach police pension plans said last year the SEC subpoenaed documents regarding their relationship with Smith Barney.
The West Palm Beach police pension board ended its relationship with Smith Barney about two months ago, the news report said.
Products June 22, 2007

State Street Offers BRIC ETF

State Street Global Advisors has announced the launch of the SPDR S&P BRIC 40 ETF (exchange-traded fund), giving investors access to companies in Brazil, Russia, India and China.
Reported by
According to the announcement, the new fund seeks to track the S&P BRIC 40 index – the dominant BRIC benchmark for institutional mandates – and includes 40 leading companies, representing the largest and most liquid securities in Brazil, Russia, India, and China. All index holdings trade in developed market exchanges (Hong Kong Stock Exchange, London Stock Exchange, NASDAQ, and NYSE).
The SPDR S&P BRIC 40 ETF will have an annual expense ratio of .40%, the announcement said. The fund will begin trading on the American Stock Exchange on June 22.
“The launch of SPDR S&P BRIC 40 ETF reflects the significant interest that we are seeing from financial advisers and institutional investors in this particular segment of emerging markets,” said James Ross, senior managing director of State Street Global Advisors, in the announcement.
More information is at www.ssga.com.

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