Mutual fund companies, including No. 2 Fidelity Investments, have slashed fees on their most popular funds by shifting billions of dollars into collective trusts not regulated by the U.S. Securities and Exchange Commission. The growing shift to collective trusts could prove a weapon for actively managed mutual funds losing out to low cost passive investment products such as the exchange-traded funds offered by rivals such as Vanguard Group, the biggest mutual fund company. For investors, one drawback is less transparency about the risks and performances of their holdings. “CITs are more opaque to the outside world because reporting requirements are not as stringent,” said Michael Rawson, manager of research at Morningstar Inc. More on Reuters [...]

The U.S. Securities and Exchange Commission may strip Vanguard Group, BlackRock Inc and State Street Corp, the oldest and biggest providers of exchange-traded funds, of an advantage they hold over newer rivals in how they assemble the shares of their funds, said sources familiar with the SEC. ETFs are typically funds whose holdings are meant to mimic the performance of an index. To do that, the SEC has said the securities used to create shares in most funds must be the same ones as in the fund’s portfolio unless there was a change in the index the fund tracks. But BlackRock, Vanguard and a few others, who were among the first to apply with the SEC to create ETFs, are allowed greater leeway: if they need a difficult-to-find security to create shares of their funds, they are permitted to use a similar security – not necessarily the same one – in the fund. This greater flexibility makes it easier and cheaper to run the older funds, and harder for newer entrants into the market such as Northern Trust, Van Eck Global and Charles Schwab Corp to compete. More on International Business Times [...]

The Securities Exchange Commission on Thursday restricted the ability of financial industry veterans to judge investor arbitration cases against brokerage firms, pleasing investors who claimed they injected pro-industry bias into the process. The rule change, proposed by the Financial Industry Regulatory Authority (FINRA), an industry-funded group tasked by Congress to oversee securities firms, is one of the most significant changes to Wall Street’s system for resolving disputes between investors and brokerages in years, lawyers said. More on Reuters [...]

The Securities and Exchange Commission is probing whether companies are muzzling corporate whistleblowers. In recent weeks the agency has sent letters to a number of companies asking for years of nondisclosure agreements, employment contracts and other documents, according to people familiar with the matter and an agency letter viewed by The Wall Street Journal. The inquiries come as SEC officials have expressed concern about a possible corporate backlash against whistleblowers. More in the Wall Street Journal [...]