RIABiz

News, Vision & Voice for the Advisory Community

RIABiz

After Fidelity Investments and its owners get blasted by Reuters for alleged high-level conflicts of interest, Morningstar accepts the Boston-based giant's explanation

Fidelity says it was misrepresented, Reuters stands by its story and a Fidelity forever RIA urges the venerable Boston firm to apply a quick coat of Scotch Guard to its white hat

Author Janice Kirkel October 14, 2016 at 5:55 PM
2 Comments
no description available
Ken Weber: We’ve always portrayed Fidelity ... as the guys in the white hats. This puts splotches on the white hats.

Abigail Johnson

|

Vincent Loporchio

|

Aaron Schumm


NS

NS

October 14, 2016 — 7:10 PM
Reuters is not even "technically" correct on this. In finance if you omit material information you are committing fraud. Reuters states that IF the mutual funds had invested in those same specific pre-IPO companies they would have made money, and since they did not the conflict of interest hurt the mutual fund shareholders. What they are omitting is that IF the mutual funds had also invested into the number of losing deals shareholders would have been hurt. In the reverse, since the mutual funds did not invest in the loser deals share holders benefited. The omission of the full set of investment options creates a false set of facts. Here is the worse failure of the Reuters story: They are clear and simple comparing apples to oranges. The mutual funds have a lower risk tolerance than the PE firm F-prime. The mutual funds are prohibited by the SEC from having more than 15% of their assets in illiquid investments. To say that the PE firms investments into higher risk and illiquid positions hurts the mutual fund shareholders is false because the mutual funds cannot invest effectively in those markets the same way a PE firm can. Since the funds cannot invest effectively they would not benefit return wise in the fashion that PE firms do. Perhaps Reuters would be better served to write an article criticizing the SEC & FINRA for preventing non-qualified investors from investing in private equity? After all, more investors are shut out of those lucrative markets by the regulators than any other entity or investment company. At least FIDO funds are trying to get exposure in those markets in spite of the over burdensome rules aimed at limiting investor access to this investment type.
On the money

On the money

October 14, 2016 — 10:28 PM
Fidelity gets a black eye. Big Reputation Damage. Did Fidelity disclose that it uses OPM in its mutual funds to bolster the price of IPO's in which the Johnson family has stakes? Did it disclose that it used the same people to make sure that the pre-IPO and the IPO business and the mutual funds were in compliance with the full disclosure regulations and conflict regulations? Let's see MaryJo, the SEC Chief and Senator Warren look into this racket.

Related Moves

June 24, 2024 at 11:48 PM

Christa Carone, an ex-Fidelity and Xerox marketing whiz, steps onto a slippery slope at LPL with a daunting task -- to consolidate a NASCAR size brand portfolio... or not?

With no CMO since August, the chief marketing officer will play catch up for a company still hungry to buy more branded B2B and B2C players.

April 2, 2024 at 1:28 AM

Tim Buckley sends shockwaves by retiring as Vanguard CEO after adding $750 billion per year during his stay in the executive suite

The 54 year-old lasted just over six years in the job, delivered on targets, but he also made head-scratching decisions and never solved its technology woes

March 1, 2024 at 3:35 AM

Joanna Rotenberg is departing Fidelity Investments after only two years, writing that she traveled 20,000 miles and successfully split her retail division into wealth and brokerage units

At her hire, analysts were adamant the head of Fidelity retail had 'big shoes to fill' to replace legendary Kathleen Murphy and her task of 'digitiizing' retail was no small ask

December 16, 2023 at 2:22 AM

See more related moves

Mentioned in this article:

Morningstar, Inc.
TAMP
Top Executive: Joe Mansueto



RIABiz Directory

The Industry Sourcebook for RIAs

   |    LISTING


RIABiz Directory sponsored by:

Directory Sponsor Logo

White Paper Postings


Common Tags


Recent Articles


Popular Writers


RIABiz logo

RIABiz

About Us

Directory

Archives

Connect

RIABiz, Mill Valley, California
Copyright © 2009-2024 RIABiz Inc. All rights reserved.