* AMERIPRISE SETTLES ON SALES OF 529 PLANS: Ameriprise Financial Inc. will pay $1.25 million to settle an enforcement action brought by regulators over its sales of Section 529 college savings plans, the company said. Ameriprise neither admitted nor denied wrongdoing.Brokerage regulator NASD said that the action against broker and insurer Ameriprise was its first in a probe into Section 529 plan sales practices at 20 securities firms. Other investigations are ongoing.
Section 529 plans - named after the federal tax rules under which they were created - were rolled out in 1997 and offer tax breaks for setting aside college savings. With more than 80 plans now marketed across the country, and assets in the accounts nearing $60 billion this year, according to consulting firm Financial Resources Corp., NASD has been looking into possible abuses by plan brokers.
NASD said that it found that from May 2001 through the end of 2004, Ameriprise sold more than $1.1 billion of 529 plans to more than 138,000 customer accounts and did not adequately supervise those sales. Ameriprise, formerly American Express Financial Advisors, will pay a fine of $500,000 and an additional $750,000 to compensate customers.
* STUDY SAYS STOCK OPTION VALUES DECLINING: According to a recent study, the value of stock options given to employees at the nation's largest companies dwindled by roughly 60 percent from 2001 to 2004.
A study performed by global consulting concern Watson Wyatt Worldwide said that the total value of option grants over the three-year period plunged from $118 billion to $51 billion.
In 2004, Watson Wyatt said that the value of stock options fell roughly 17 percent, while the study stated that the decline occurred throughout all major industry sectors.
The Watson Wyatt study also found that companies that provided higher total long-term incentive opportunities to their chief executives over the last five years did not outperform those that provided lower-award opportunities. Also, the number of stock options granted to CEOs declined more than 11 percent last year, and by nearly 37 percent between 2001 and 2004.
* ETFs BEING WORKED INTO 401(K)s: Exchange-traded funds, once avoided as a retirement vehicle because of fees, are now being implemented into 401(k) plans, according to recent reports.
ETF's are index-tracking mutual funds that are bought and sold by a broker and traded all day on an exchange. The new ETF impetus comes as a result of bundling trades from employees and business into weekly purchases.
ETFs feature tax advantages and low maintenance fees, but high trade fees have traditionally kept them out of retirement plans.
* S&P COMPANIES BECOMING CONSERVATIVE ON EPS: Roughly two thirds of companies in the S&P 500 have exceeded analysts' estimates on earnings per share dating back to the first quarter of 2004 - a signal that companies have become more conservative on their earnings guidance.
Based on a study by financial consultancy Parson Consulting, since the passage of Sarbanes-Oxley nearly one in four companies has exceeded analyst expectations by more than 10 percent.
Specifically, SOX mandated a shortened time frame in which companies must report quarterly and annual earnings to the Securities and Exchange Commission.
By contrast, the percentage of companies that have missed their projected EPS by more than 10 percent averaged about 7.4 percent, with 8 percent missing the mark in the second quarter of 2005.
For the study, Parson examined public data for all of the available quarterly results of S&P 500 companies as of August 2005. Specifically, Parson focused on differences between EPS consensus estimates and actual results.
"This study indicates that companies may be very conservative when projecting their earnings, causing them to under-promise and over-deliver," said Toni Hicks, senior vice president of practices at Parson Consulting, in a statement. "Financial executives could be submitting lower expectations, through this conservatism that will result in them easily beating their projected earnings."
