Highlights and Commentary

By Roy Weitz

(Originally posted April 1, 2004) [Archive Table of Contents]
"Hey, look what we found!"


Scandal settlements are occurring frequently now, and the biggest settlement last month involved the Nations funds, run by Bank of America.....The Bank (along with its merger partner, FleetBoston, which owns the Columbia funds) agreed to cough up $675 million in various penalties, restitutions, and fee reductions.....As part of its settlement with the SEC and Eliot Spitzer's office, the Bank also agreed to persuade eight directors of the Nations funds to quit their jobs.....But the directors have unexpectedly discovered that they have backbones, and they may refuse to step down......What's behind this sudden uprising by the formerly vertebrate-challenged directors?.....The tale begins in May 2002, when the eight Nations directors voted to impose a 2% short-term redemption fee on certain Nations funds.....They also agreed to exempt some clients, who turned out to be market timers, from the 2% fee.....The directors say they had been assured by the Bank that it had separate contracts with these exempt customers, and that restrictions on market timing were spelled out in those contracts.....Of course, no such anti-timing provisions existed, yet not a single Nations fund director had the spine to ask for those contracts, or the savvy to review them.....Now, months after the damage has been done, the Nations directors have finally decided to assert themselves.....We can't imagine that they'll hang on for long but, in the meantime, this episode could be quite entertaining, and perhaps even instructive.....Who knows: Directors from other funds, who are following this story, also might discover a body part they didn't know they had.....(Hint: It's that knobby thing, and it runs up and down your back.)


The Whiston Watch

	Number of months that Janus CEO, Mark Whiston, still hasn't explained his role in the Janus market-timing scandal, including what he knew and when he knew it.

Mark Whiston still isn't talking, but that may not matter.....CBS.MarketWatch (and the Rocky Mountain News) have obtained a copy of an internal Janus memo that indicates Whiston knew about extensive market-timing activities at Janus as early as November 2002, ten months before the firm was first named in Eliot Spitzer's mutual fund investigation.....Here's a quick timeline, showing some of the key behind-the-scenes events at Janus:

• Sometime prior to November 2002, Whiston (who was still a marketing exec) asks for an internal study of Janus' market-timing problem.
  
  
• An e-mail is sent to Whiston on November 12, 2002, containing a draft of the market-timing study he had requested.
  
  
• The study indicates that about 1 percent of Janus' daily fund flows were attributable to market timers. The memo also makes reference to timers "slipping through" the company's estimates because "they are Janus-approved timers and thus, not being monitored or policed." Janus employees are under no illusions about market timers, and it's clear that their deal with the devil troubles them. According to the Janus study, "market timers hurt everyone except themselves." The recommendations section of the memo calls for a "zero tolerance" policy toward market timers.
  
  
• On January 1 2003, Whiston officially takes over as Janus CEO.
  
  
• A June 2003 Janus e-mail, released as part of Spitzer's investigation, indicates that at least five Janus clients are still timing the company's funds. Writes one employee about the timing situation: "We are all over the board. There is no consistency. It is the wild west out there."
  
  
• On September 3, 2003, New York Attorney General Eliot Spitzer publicly drops the hammer on Janus' market-timing activities.

In light of the November '02 memo, it's difficult to see how Whiston can survive as CEO.....Since there's no question that Whiston knew about market timing at Janus almost a year before Spitzer's investigation, there seem to be only two possible explanations: (1) CEO Whiston failed to act on one of his company's high-priority, "zero-tolerance" problems, or (2) he made a conscious decision to allow market timers to continue stealing from his company's funds.....Either way, Whiston was responsible for conduct that hurt Janus fund owners -- and it was conduct that Whiston could have stopped in the time that it takes you (or him) to read this sentence.....We could be wrong about this one, but we don't think so.....In fact, we've already prepared our next Whiston Watch graphic:


"Spitzer may force Janus CEO out," Luisa Beltran & Chuck Jaffe, cbs.marketwatch.com, March 25, 2004; "Janus memo detailed timing," David Milstead, rockymountainnews.com, March 27, 2004


Warren Buffett, fund manager? We didn't realize this, but Berkshire Hathaway, Warren Buffett's company, holds publicly-traded stock that's worth about $35 billion.....In other words, viewed as a mutual fund, Berkshire's publicly-traded stock holdings would be the sixth-largest actively-managed fund in the U.S., just ahead of Dodge & Cox Stock, and just behind Fidelity Contrafund..... As you might expect, Buffett runs the fund-like portion of Berkshire Hathaway in his own, unique style -- think of it as a super-focused mutual fund.....For example, at the end of 2003, Berkshire's stock portfolio consisted of only 29 stocks, and just 10 of those stocks made up nearly 90 percent of the portfolio's value*....In fact, Buffett's stock portfolio is even more concentrated than the preceding numbers might suggest, since over 80 percent of his holdings were recently in stocks from just three economic sectors (financial services, consumer goods, and energy).
"Investors, Do Not Try This at Home," Paul J. Lim, The New York Times, March 14, 2004

* The ten stocks were: Coca Cola, American Express, Gillette, Wells Fargo, Moody's, The Washington Post Company, PetroChina, H&R Block, HCA, and Wesco Financial


Just a few weeks ago, if you took at look at the prospectus for several Vanguard index funds, one rule seemed pretty clear: You couldn't make an exchange from one Vanguard fund to another after 2:30 p.m. eastern time:


And while these highlighted words seem to say "end of discussion," it turns out that they really meant "tell us how much money you have".....Vanguard has admitted that the 2:30 p.m. cutoff never applied to its "Flagship" customers, who are worth $1 million or more, despite the clear language in the prospectus*.....Vanguard has now decided to do away with the cutoff for all of its customers, which is nice, but it still leaves us wondering: Will Vanguard get away with violating its prospectus, while other firms are hauled before Spitzer or the SEC for similar offenses?......Vanguard gave special trading privileges to an entire class of well-heeled investors, while firms like Janus, Putnam, MFS, Franklin, and PIMCO cut their deals with a select group of sleazebags.....But, from a broader perspective, Vanguard showed contempt for the mutuality of "mutual funds" just as surely as these other malefactors did.....Vanguard made a conscious decision to violate its prospectus, in favor of certain investors, because Vanguard felt that it could obtain an economic advantage by doing so (i.e., the firm could keep its base of wealthy customers happy and intact)......For this, Vanguard deserves a public sanction.
* "Vanguard drops trading ban at core of scandals," Todd Mason, philly.com, March 5, 2004

"Only the little people pay taxes" --Leona Helmsley, despised New Yorker

"Only the little people have to follow our rules" --John Brennan, Vanguard CEO

More embarrassment for Vanguard: Doris (Dee Dee) Havens is a former Vanguard employee, who worked as an investor services rep at the firm's Scottsdale, Arizona office.....Ms. Havens recently filed a "complaint" with several regulatory authorities, including the SEC and NASD, regarding certain practices she observed while working at Vanguard.....Among the points that Ms. Havens makes in her complaint:

• Three Vanguard customer service centers, specifically designed to handle retirement-related issues, are a mess. These centers (which serve all but Vanguard's wealthiest clients) are chronically understaffed and overworked, and they seem to have a particularly hard time preparing accurate "RMD" (Required Minimum Distribution) calculations for Vanguard shareholders aged 701/2 and older. According to Ms. Havens, "the computer system used to provide the [RMD] calculations is antiquated and has made certain systematic errors for years of which Vanguard is fully aware." Vanguard appears unwilling to spend the money needed to fix the system, in part because all of the people affected by the problem are (by definition) withdrawing assets from the firm rather than adding to their accounts.
  
  
• Vanguard cannot locate beneficiary designations for "scores" of retirement accounts, and is not devoting sufficient resources to solve the problem. In some cases, Vanguard has simply taken its best guess at a shareholder's beneficiary designation, because it couldn't locate the underlying documents.
  
  
• Vanguard carefully stratifies its customer base by asset size, and provides special resources and accommodations for its larger clients. In addition to waiving the 2:30 p.m. trading cutoff for its wealthiest index-fund investors (see above), Vanguard routinely allowed its wealthy customers to place mutual fund trades after the stock market closed (at 4:00 p.m. eastern time), as long as the customer had initiated the call prior to 4:00 p.m. Needless to say, this practice ended abruptly last fall, once the mutual fund scandals broke and Vanguard received a (so-far) routine subpoena from the office of Attorney General Eliot Spitzer. Unlike Vanguard's trouble-prone retirement centers for the hoi polloi (above), the retirement centers for wealthy clients are fully-staffed and produce accurate work. Ms. Havens compares Vanguard's two-tier system to a bank with two sets of automated teller machines: Accurate and dependable machines are available for customers with larger accounts, "while customers with smaller accounts wait in long lines to use machines which frequently dispense incorrect amounts requiring weeks to correct."
  
  
• Vanguard publicly acknowledges two high-roller categories: "Voyager," for accounts from $250,000 to $1,000,000, and "Flagship," for accounts of more than $1,000,000. Internally, Vanguard also adds a "Plus" designation to each of these categories ("Voyager Plus" and "Flagship Plus"), to tag clients who are believed to have substantial assets outside of Vanguard.
  
  
• Vanguard tries to identify "Plus" clients (above) through a variety of methods. For example, phone associates are trained to aggressively probe for outside assets, and are expected to share this information within the firm. Also, customer demographics (such as "wealthy" zip codes) are analyzed, and Vanguard uses data gathered from both printed financial planning questionnaires and online portfolio tools to help identify its customers with significant outside assets.
  
  
• With instructions from their superiors, Vanguard phone associates will periodically invent a reason to contact high-net worth clients, in a further effort to identify and gather outside assets.
  
  

Ms. Havens has given us permission to reproduce her complaint, portions of which you can find on the accompanying page.....If you're a Vanguard shareholder, this document is a must-read.....Even if you're not a Vanguard shareholder, Ms. Havens' complaint is a fascinating look inside a large, twenty-first century mutual fund firm (and, when you're reading this document, remember that Vanguard is one of the industry's good guys).....We don't know if Ms. Havens' allegations are true, but her complaint is an impressive document, and we think it will appear quite credible to anyone who has ever worked in a large firm (especially a large financial services firm) ....How has Vanguard responded to the Havens complaint?.....Well, for starters, they fired her for trying to distribute it within the firm.....Beyond that, Vanguard has basically stonewalled, and a recent quote from CEO Brennan says it all.....Brennan calls the Havens complaint "a litany of inaccurate and misleading assertions"* (as some may remember, Watergate was initially described as a "third-rate burglary").....We can understand Brennan's sensitivity, but his reaction to the Havens complaint isn't much comfort if Vanguard has, indeed, miscalculated your retirement distribution, or lost your beneficiary designation, or used your online portfolio information for marketing purposes.....Havens makes some very specific, well-documented charges.....Vanguard shareholders are entitled to specific answers, and it seems to us those answers should come from the top.
* "The Vanguard Chronicles," Jason Zweig, Money, April 2004




Ho hum: Based on the headline above, it might seem like just another financial firm is being fined by just another regulatory agency.....But this is actually a whole new scandal, and it may be worth your attention.....The issue involves something called an "NAV transfer," which is described by the NASD as follows:

"Through an NAV transfer, you can purchase Class A shares of a mutual fund without paying a front-end sales charge if you invest some or all of the proceeds from the sale of a mutual fund in another mutual fund family for which you paid a front-end or contingent deferred sales charge (CDSC) within a specified period of time.

If you're not already familiar with NAV transfers, you may need to read this paragraph a couple of times, because it sounds too good to be true: Fund X will waive the usual load on purchases of its Class A shares, as long as the money you're investing has come from the sale of another family's load fund .....Not many fund families offer NAV transfers, but brokers are under an obligation to make sure that their investors get the full benefit of the break whenever it applies.....That's where AXA Advisors tripped up: According to the NASD, AXA failed to identify NAV transfer programs at two of the fund firms that it did business with (Eaton Vance and PIMCO), which means that AXA charged its customers $700,000 in mutual fund commissions that the customers weren't required to pay.....Ultimately, of course, the blame lies with AXA for not having the proper back-room procedures to identify purchases eligible for NAV transfers.....But the fund companies that offer NAV transfers don't exactly trumpet that break from the highest mountain top.....In fact, you need a keen eye even to figure out that a NAV transfer is available, since the words "NAV transfer" are seldom used.....Consider, for example, the following language, buried deep in an Eaton Vance prospectus, under the heading "Reducing or Eliminating Sales Charges":

"Class A shares are also sold at net asset value if the amount invested represents redemption proceeds from a mutual fund not affiliated with Eaton Vance, provided the redemption occurred within 60 days of the Fund share purchase and the redeemed shares were subject to a sales charge."

Yes, this is how you're supposed to know that Eaton Vance allows NAV transfers.....As with breakpoints, your broker is supposed to make you aware that you can save money with an NAV transfer and, as with breakpoints, there are many reasons why your broker may fail to do this.....If you're selling shares of one load fund, and buying "A" shares of another load fund, it can't hurt to ask your broker if the new fund allows for an NAV transfer.....You may save yourself a front-end commission and, who knows, your broker might even learn something.

The NASD has posted an "Investor Alert" about NAV transfers ("Net Asset Value Transfers: Look Before You Leap Into Another Mutual Fund"). You can find it on the NASD Web site, at http://www.nasd.com/Investor/Alerts/alert_nav_transfers.htm.


The FundAlarm Review of Books

Title:	Capital: The Story of Long-Term Investment Excellence
Author:	Charles D. Ellis
Publisher:	John Wiley & Sons, Inc.
Price:	$24.47(at Amazon.com)

If you've read the review below and still insist on buying this book, you can get it from Amazon.com
by clicking on the following link: Capital: The Story of Long-Term Investment Excellence. FundAlarm will
receive 15% of the purchase price if you use this link, instead of our usual 5%.

This book is about the Capital Group Companies, which runs the American family of mutual funds. Author Charles Ellis does a good job listing the name of every executive who ever worked at the Capital Group (or so it seems), and a few of these interchangeable executives even share some bland anecdotes with Ellis. Ultimately, however, Ellis' book is about a company where the greatest corporate virtue is not rocking the boat, and the greatest corporate sin is standing out from the crowd. Without any conflict, and without any human beings, Capital never develops a narrative, and Ellis basically has no story to tell. This is a page-turner only in the sense that you keep waiting for something -- anything -- to break the monotony.

Ellis starts Capital with his conclusion -- no other investment organization is so well-designed for sustained success -- so the reader doesn't even have the fun of figuring out where Ellis is going. To make up for the lack of author-provided fun, we created our own game, "What's wrong with this company?", and here's what we decided. The Capital Group is about to run out of Lovelace DNA. Lovelace father and Lovelace son have run this company for over 70 years. The junior Lovelace is now pushing 80, and there don't appear to be any Lovelace successors on the horizon. To the extent that this company has been successful for the past seven decades -- and, without a doubt, it has been phenomenally successful -- it's because the junior Lovelace (especially) has orchestrated an unnatural act: He's kept Capital Group focused on its mission and, more importantly, he's managed to submerge the egos and greed of his money managers (in part, through the firm's "multiple counselor" system of money management). If there was a potential story in this book, and a potential focus, it's clearly the junior Lovelace. Unfortunately, in Ellis' hands, Lovelace comes across as a mystery man, some kind of odd cross between Jack Welch and Yoda

For those (like Ellis) who assume that the future success of the Capital Group is preordained, we have two words: Arthur Andersen. Companies change when their founders depart, and even the strongest professional values and organizational structures can weaken, sometimes quite suddenly. We're not predicting this will happen at Capital Group, but it's an interesting possibility, and something for investors to keep an eye on. Certainly, this possibility is more interesting than Ellis' tedious cheerleading.

FundAlarm's rating of Capital, by Charles Ellis(five stars is best) For fund investors in general: For investors in the American funds: For fans of boring companies:

Other books that might shed some light on the Capital Group:
Man in the Gray Flannel Suit, by Sloan Wilson
The Stepford Wives, by Ira Levin
I, Robot, by Isaac Asimov


We're changing the threshold for our small-cap benchmark: Since the inception of FundAlarm, domestic stock funds with a median market capitalization of less than $1 billion have been classified as small-cap funds, and the performance of those funds has been compared to our small-cap benchmark (Vanguard Small Cap Index).....Beginning this month, we're raising the threshold for small-cap funds from $1 billion to $1.5 billion of median market capitalization (all other benchmark thresholds remain the same).....There are a couple of reasons for this change: Over the years, the median market cap of the small-cap benchmark has been creeping up, and this month, for the first time, the median market cap of Vanguard Small Cap Index itself exceeds $1 billion.....Also, after a careful review of all funds that were previously classified as small- and mid-cap, we concluded that raising the small-cap threshold to $1.5 billion would properly move a number of former mid-cap funds into the small-cap category.....Bottom line: About 200 mid-cap funds from last month are now included in the small-cap category.....In a few cases, former 3-ALARM funds may appear to be much better performers, simply because of the benchmark change.....In a similar fashion, but at the opposite end of the performance spectrum, several NO-ALARM (Honor Roll) funds have been demoted, again due to the benchmark change.


Briefly noted:

• Last month, we reported (with some outrage) that MFS planned to rehire two of its disgraced executives after they completed token suspensions for their market-timing activities.....Other folks, some of them with money, apparently shared our outrage....."In response to concerns from the marketplace and [from] clients," MFS announced in early March that the two execs (John Ballen and Kevin Parke) would not be returning to the firm after all*....A few days later, with great fanfare, MFS also announced a number of scandal-inspired reforms (including the abolition of soft-dollar payments)....It's interesting to note that new MFS CEO Robert Manning, who spectacularly mishandled the Ballen/Parke suspensions, wasn't even quoted in the press release announcing the firm's reforms.....Instead, MFS turned to its new "non-executive chairman" of investment management, Robert Pozen (formerly CEO of Fidelity), to put on a credible public face.
  * "MFS bows to pressure, ousts Ballen, Parke," Jeffrey Krasner and Andrew Caffrey,boston.com, March 6, 2004
  
  
  
• It's generally not a good thing to see the name of your fund manager as a defendant in an SEC lawsuit, but that's exactly what's happened at the Heartland funds:
  
  
  Hugh Denison earned his defendant status for his role in the massive portfolio losses suffered by Heartland's high-yield muni-bond funds in October 2000 (at the time, Denison was a member of Heartland's board of directors).....With a resume like that, you or I couldn't be elected treasurer of the office investment club.....Mr. Denison, on the other hand, was just named co-manager of Heartland Select Value..
  "Heartland manager to start own firm, Kathleen Gallagher, jsonline.com (Milwaukee Journal Sentinel), March 18, 2004
  
  
  
• As we've noted before, soft-dollar deals can be difficult for the average fund investor to understand.....And, even if you think you understand the mechanics of soft-dollar deals, you probably have a lingering suspicion that, well, it can't be all that bad.....For those of you who still need convincing, here's a "typical" soft-dollar transaction, as described by Harold Bradley of the American Century funds.....(Bradley is the firm's chief investment officer, so he should know what he's talking about.....And, for the record, American Century has a policy that prohibits soft-dollar transactions):
  
  

  [According to Bradley, American Century was recently] "comparing providers of what is called middleware technology, which links the trading and back-office systems. They're very expensive. For a company our size, it's about $10 million. As we were shopping price among vendors, their typical response was 'Why are you worried about price? We can just soft-dollar this for you.' In that case, instead of American Century paying $10 million, our fund investors would pay it. We would send $16 million of [fund] commissions to a broker, who would then write a check for $10 million to this vendor of hardware and software systems. We will not play that game. But it was clear from the way they were shopping it that a lot of our competitors are."

  
  "'Soft dollars' abuse investors, fund exec charges," Jonathan Burton, CBS. MarketWatch.com, March 17, 2004
  
  
  
• The Fidelity mutual funds own a lot of Disney shares, and Fidelity recently voted those shares against re-electing Michael Eisner to the Disney board of directors.....Fidelity would probably say that a new law, requiring the firm to publicly disclose such proxy votes, had nothing to do with its anti-Eisner decision.....We say: Bull....Fidelity also administers Disney's corporate 401(k) plan.....If the new law didn't require Fidelity to disclose its Eisner vote, there's almost no chance that Fidelity would have voted against such a high-profile customer.
  "For Disney's Embattled Chief, a Double Rebuke from Fidelity," Laura Holson, The New York Times, March 15, 2004
  
  
  
• Is it too late to sign up?
  
  
  
  
• Putnam fund managers Justin Scott and Omid Kamshad were fired several months ago for market-timing their own funds....As it turns out, neither Scott nor Kamshad really needed their market-timing gains to buy groceries.....For the year 2000, a year in which both managers were actively stealing from their funds, Scott was paid $14.3 million for his managerial services, while Kamshad received $8.7 million.....Scott managed about $18 billion in assets that year, while Kamshad managed slightly less ($17 billion), yet Scott earned about 64% more than his partner in crime.....Wouldn't it be nice if Putnam shareholders knew why Scott earned an additional $5.6 million?.....Yes, it would be nice, and it's called "disclosing the structure of a portfolio manager's compensation."
  "SEC Report Shows Putnam Investments' Managers Were Given 'Lavish' Paychecks" John Hechinger, The Wall Street Journal, March 25, 2004
  
  
  

  In a recent television interview, New York Attorney General Eliot Spitzer (left) said that many people on Wall Street aren't necessarily opposed what he's trying to do with his recent mutual fund investigations....."What we are doing is meant to be therapeutic, not punitive," Spitzer said, and many Wall Streeters he has spoken to understand that. Source: mfwire.com

  
  
  
• RS Investments is being investigated by the SEC, and the firm probably will be implicated in market-timing activities, especially in connection with the RS Emerging Growth Fund.....(Duh, let's take a look: RS Emerging Growth had $1.7 billion in average net assets for 2002, $5.2 billion in new money, and almost exactly the same amount -- $5.4 billion -- in redemptions*.....Yup: Looks like those guys at RS just might be in trouble).....Also in the SEC's market-timing sights: Fremont Investment Advisors, which runs the Fremont mutual funds.
  * morningstar.com
  
  
• Boola boola: Three members of Yale's 1953 football team rub shoulders on the Franklin funds board of directors: Inside director Charles B. Johnson, who's CEO of the company that manages the Franklin funds, is joined by "independent" directors (and former football teammates) Joseph Fortunato and Harris Ashton....."Hey, guys, remember when Smitty ran for that 32-yard touchdown against Harvard? Oh, and as long as we're talking, I want you to be totally objective when it comes to voting on that increase in our management fee."
  "As Scandals Mount, Boards Of Mutual Funds Feel the Heat," George Anders, The Wall Street Journal, March 17, 2004
  
  
  
• Dr. Lawrence Cohn is chief of cardiac surgery at a Boston hospital, where he leads a team that performs 1,100 heart surgeries a year.....He's also an associate professor of surgery at Harvard Medical School....In his remaining quality time, Dr. Cohn is an independent trustee for 109 MFS mutual funds
  Anders article, above
  
  
  
• Thomas Hansberger, founder and CEO of Hansberger Global Investors, has been sidelined after a heart-transplant operation.....As of early March, the firm said that Hansberger was making "excellent progress," and an executive committee was in charge of day-to-day operations.....There was no word on when Hansberger might return to work.....Hansberger runs several funds under its own name, and it's also one of the subadvisors (outside managers) for Vanguard International Value.
  "Team runs Hansberger after founder's illness," Cal Mankowski, Reuters, March 3, 2004
  
  
  
• Fidelity has a mandatory retirement age of 72 for its independent fund directors.....But there's no retirement age for the firm's "interested" (i.e., inside) directors, including the most interested (in keeping his job) director, Fidelity chairman Edward C. Johnson III.....Why is there no retirement age for Fidelity's inside directors, and in particular Mr. Johnson?.....According to a Fido spokesperson, it would be a "disservice to fund shareholders if a person such as Mr. Johnson were not able to continue to serve as a director or chairman because of a [silly rule that should only apply to little people such as a mandatory] retirement age."
  "Fidelity's Johnson Seeks to Keep Both His Jobs," John Hechinger, The Wall Street Journal, March 17, 2004
  
  
  

  				JUST ADDED!
  "Only the little people pay taxes" --Leona Helmsley, despised New Yorker		"Only the little people have to follow our rules" --John Brennan, Vanguard CEO		"Only the little people need a mandatory retirement age" --Edward C. Johnson III, Fidelity Chairman

  
  
  
• This item comes from north of the border, but we just couldn't resist: A Canadian law firm has launched a class action suit against CIBC Asset Management.....The lawsuit alleges that a CIBC fund (Renaissance U.S. RSP Index) has underperformed its bogey U.S. index by 18% since March 2002, when CIBC took over management of the fund.....CIBC's problem appears to be currency fluctuations: Under previous management, the fund was hedged against a decline in the U.S. dollar.....CIBC appears to have overlooked this detail, even though hedging is one of the fund's fundamental objectives and investment policies.
  
  
  
• If you worked alongside a fund manager who's been fired because of the recent fund scandals, you're probably dreading the moment when you'll be asked to provide a reference for your disgraced colleague.....Below are some carefully crafted phrases that will fulfill your business obligation to your former co-worker, without compromising your own integrity:
  
  
  • "I am pleased to say that this candidate is a former colleague."
    
    
  • "I cannot recommend this person too highly."
    
    
  • "I would place this portfolio manager in a class by himself."
    
    
  • "He is definitely a man to watch."
    
    
  • "Ann works without any direction."
    
    
  • "I’d waste no time in reviewing his résumé."
    
    
  • "When Sue left our fund company, we all hoped that she would go a long way ."
    
    
  • "I’m sure that your impressions will match my feelings towards her."
    
    
  • "I wouldn’t hesitate to give him sweeping responsibilities."
    
    
  Thanks to Ken Kivenko, an investor advocate, management consultant, and engineer in Canada. Ken's web site is mutualfunds4u.com.

---

[Top | Home]

FundAlarm © Roy Weitz, 2004