Sunday, 6 July 2025

Where did all the hearings go???

https://www.sunlifeglobalinvestments.com/en/about-us/investment-management/mfs/?slgi_r=investor 
 

MFS Investment Mangement

Since 1924, MFS Investment Management 1 has guided investors in the United States through every market condition on record. Today, our exclusive lineup of Sun Life MFS funds brings Canadian investors the power of their deep-rooted expertise and three driving pillars of investment success. 

Mike W. Roberge

Mike W. Robergehttps://www.mfs.com/content/dam/mfs-enterprise/mfscom/images/people/000000000-premium-portrait-refresh/michael-roberge-433x528.jpg                                                                                Michael W. Roberge, CFA, is chair of MFS Investment Management® (MFS®). He helps set the strategic direction of the firm. He is the chair of the Chairman's Committee, chair of the MFS Board of Directors, and a trustee on the MFS mutual funds board. Michael became chair in 2025 after leading the firm as CEO from 2017 to 2024. In addition, he held the role of chief investment officer from 2010 through 2018. He also previously held the roles of president of MFS from 2010 through 2017 and co-CEO from 2015 through 2016. In 2006, he was appointed chief investment officer -- US Investments and co-director of Global Research. Before that, he was senior vice president and associate director of Fixed Income Research and served as portfolio manager for several MFS fixed income funds. He joined the firm in 1996 as a credit analyst in the municipal fixed income group. Before joining MFS, he was a municipal credit analyst and portfolio manager for the Colonial Group from 1995 to 1996 and a credit analyst with Moody's Investors Service from 1991 to 1994. Michael earned a Bachelor of Science degree from Bemidji State (Minn.) University in 1990 and a Master of Business Administration degree from Hofstra University in 1992. He is a Chartered Financial Analyst and a member of the CFA Society Boston. He is also the vice chair of the board of Horizons for Homeless Children, a Boston-based nonprofit organization dedicated to combatting the negative impact of homelessness on children and families.


https://www.mfs.com/content/dam/mfs-enterprise/mfscom/images/people/000000000-premium-portrait-refresh/heidi-hardin-433x528.jpg
Heidi W. Hardin is executive vice president and general counsel at MFS Investment Management® (MFS®). She leads the Legal, Compliance and Enterprise Risk Management departments and is a member of the firm's Enterprise Leadership Team and the Chairman's Committee. Heidi joined MFS in 2017 from Harris Associates, where she had been the general counsel since 2015. She spent the prior 16 years at Janus Capital Group Inc., holding multiple senior legal roles, with her last role being senior vice president and general counsel of Janus Capital Management LLC, the firm's global asset management business. Earlier in her career she was a vice president, senior legal counsel and chief compliance officer for Liberty Funds Group and a litigation associate at Beeler Schad & Diamond P.C. She began her career in the financial services industry in 1993. Heidi earned a Bachelor of Arts degree from DePauw University and a Juris Doctor degree from Chicago- Kent College of Law. She is a member of the board of directors of ICI Mutual Insurance Company and the Advisory Board of The Boston Ballet. 
 
Address BOSTON
Phone 1-800-637-8255
 
Angela Fader
Sr Assist Analyst at MFS Investment Management
Greater Phoenix Area
 602 322 8045
 
 https://www.blbglaw.com/cases-investigations/mfs-mutual-fund-litigation

MFS Mutual Fund Fraud Litigation

Court: United States District Court for the District of Maryland
Case Number: 04-md-15863
Class Period: 12/15/1998 - 12/08/2003

Following a hearing on May 3, 2004 in the massive mutual fund litigation, the United States District Court for the District of Maryland appointed BLB&G client the City of Chicago Deferred Compensation Plan as Lead Plaintiff in the securities fraud class action against Massachusetts Financial Services Company ("MFS"), the investment advisor to the MFS Funds, and others.

On March 1, 2006, the Court sustained the Consolidated Amended Class Action Complaint, allowing the case to move forward against certain defendants.

SUMMARY OF ALLEGATIONS:

The Complaint in this litigation alleges that MFS and certain of its senior executives were aware of, engaged in and facilitated "timing" trades in the MFS Funds: a money-making act involving short-term trading in and out of a mutual fund.  The technique is designed to exploit inefficiencies in the way mutual fund companies price their shares by allowing certain customers to trade shares at distorted prices that no longer reflect the true value of the fund.  As a result, those few customers permitted to engage in market timing typically reap huge profits, the cost of which are borne primarily by the long-term investors in the relevant fund.

The public filings issued by the Defendants stated that, "MFS funds do not permit market-timing or other excessive trading practices that may disrupt portfolio management strategies and may harm fund performance."  In reality, however, the Defendants knew, or recklessly disregarded, the fact that trades were being timed and that these timed trades negatively and materially impacted the MFS Funds, thereby causing significant losses to investors in the MFS Funds.

On February 5, 2004, MFS agreed to entry of a cease and desist order by the Securities and Exchange Commission ("SEC") against MFS and John W. Ballen ("Ballen"), MFS's current chief executive officer, and Kevin R. Parke ("Parke"), MFS's current president and chief investment officer ("Cease and Desist Order").  Specifically, the SEC found that MFS, Ballen and Parke allowed widespread market timing trading in certain MFS Funds from at least late 1999 through October 2003, in contravention of the Funds' public disclosures.  In particular, MFS explicitly informed certain select brokers in a written memo that "unrestricted" trading would be permitted in certain MFS funds (known internally at MFS as "Unrestricted Funds"), including the Massachusetts Investors Growth Stock Fund, "even if a pattern of excessive trading has been detected."  Not only did MFS selectively enforce its market-timing policies, but executives at MFS facilitated the frequent trading in and out of certain MFS Funds by steering select investors to these "Unrestricted Funds."  As the Cease and Desist Order confirms, as much as $2 billion in timing money flowed into MFS Funds during the Class Period.

Internal MFS documents and policies acknowledged that market timing was detrimental to long-term shareholders.  In fact, as early as June 2000, an internal presentation entitled "Market Timing Wheel of Terror," warned that "[l]ong term investors are being penalized" by market timing activity.  Nevertheless, the market timing activity persisted in the MFS "Unrestricted Funds."  Moreover, MFS's select enforcement of its trading policies also included late trading, which alone caused well over $100 million in investor losses.  And, as further alleged in the complaint, various brokers and financial institutions also participated in the market timing schemes, to the detriment of ordinary investors.

MFS's policy of allowing market-timing and steering select investors to the "Unrestricted Funds" was adopted as a means to increase profits by luring market timing assets so as to increase funds under management, and, therefore, increase fees paid to MFS for investment advisory services.  These additional assets under management also resulted in an increased bonus pool from which MFS employees, including Ballen and Parke, were paid excessive compensation.  During this period, none of the above detailed material information was disclosed to the members of the Class.  In addition to the profits from their market timing, MFS also profited by charging ordinary investors hundreds of millions of dollars in management fees while breaching their fiduciary duties to those very same investors.

On May 20, 2010, the Court preliminarily approved proposed settlements, totaling $75,042,250, that would resolve this litigation. On October 25, 2010, the Court entered Judgments granting final approval to the settlements and entered separate Orders granting Plaintiffs' Counsel's application for an award of attorneys' fees and expenses and approving the Plan of Allocation of the settlement proceeds. 

The claims administration process has concluded and the net settlement fund has been fully disbursed. This matter is considered closed.

https://static.blbglaw.com/docs/MFSCplt10.04.pdf 
 
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
IN RE MUTUAL FUNDS INVESTMENT
LITIGATION
This Document Relates To:
In re MFS
04-md-15863-04
MDL 1586
Case No. 04-MD-15863
(Judge J. Frederick Motz)
BRUCE RIGGS, et al., Individually and
On Behalf of All Others Similarly Situated,
Plaintiff,
v.
MASSACHUSETTS FINANCIAL
SERVICES COMPANY, et al.
Defendants.
Case No. 04-cv-01162-JFM

CONSOLIDATED AMENDED CLASS ACTION COMPLAINT
 
 
 95
Dated: September 29, 2004 BERNSTEIN LITOWITZ BERGER
& GROSSMANN LLP
/s/
ALAN SCHULMAN
ROBERT S. GANS
TIMOTHY A. DeLANGE
JERALD D. BIEN-WILLNER
12544 High Bluff Drive, Suite 150
San Diego, CA 92130
Tel: (858) 793-0070
Fax: (858) 793-0323
-and-
J. ERIK SANDSTEDT
JOSEPH A. FONTI
1285 Avenue of the Americas
New York, New York 10019
Tel: (212) 554-1400
Fax: (212) 554-1444
Lead Counsel
Dated: September 29, 2004 TYDINGS & ROSENBERG LLP
/s/
WILLIAM C. SAMMONS, Fed Bar No. 02366
JOHN B. ISBISTER, Fed Bar No. 00639
100 East Pratt Street, 26th Floor
Baltimore, MD 21202
Tel: (410) 752-9700
Fax: (410) 727-5460
Liaison Counsel
 
 
 
---------- Original message ---------
From: David Amos <david.raymond.amos333@gmail.com>
Date: Mon, Jul 7, 2025 at 1:53 PM
Subject: Fwd: 617 954 4225 RE Robert Pozen Former executive chairman of MFS Investment Management
To: <bobpozen@mit.edu>, fin.minfinance-financemin.fin <fin.minfinance-financemin.fin@canada.ca>, ministryofjustice <ministryofjustice@gov.ab.ca>, justmin <justmin@gov.ns.ca>, Mike.Comeau <Mike.Comeau@gnb.ca>, <CrownAdminOttawa@ontario.ca>, mcu <mcu@justice.gc.ca>, Sean.Fraser <Sean.Fraser@parl.gc.ca>, pm <pm@pm.gc.ca>




---------- Forwarded message ---------
From: David Amos <david.raymond.amos333@gmail.com>
Date: Mon, Jul 7, 2025 at 1:49 PM
Subject: 617 954 4225 RE Robert Pozen Former executive chairman of MFS Investment Management
To: <Leadership@mfs.com>, <kimc714@mit.edu>
 
 
 
 
 
 
 
 
 
 
 
The broader answer is that MFS wants to lead the industry to lower and more transparent execution costs. To accomplish this objective, MFS will need support from other asset managers as well as the SEC. Section 28(e) of the Securities Exchange Act provides a safe harbor for asset managers using “soft dollars” for research and brokerage services. Initially, the SEC interpreted this safe harbor narrowly--allowing payment in “soft dollars” only if a good or service or product were not readily available for cash. Several years later, however, the SEC broadened the safe harbor to include any “legitimate” purpose for soft dollars (SEC Exchange Act Release 23170, April 23, 1986). The SEC should move back to its initial narrow interpretation of 28(e) to reduce the reliance on the use of “soft dollars”.
 
II. Individualized Expense Reporting

MFS will issue an individualized quarterly statement, rather than a general listing of fund expenses in basis points, which will show each fund shareholder a reasonable estimate of his or her actual fund expenses in dollar terms. 
 
The MFS design for this individualized quarterly statement is cost effective as a result of one key assumption: that shareholders hold their funds for the whole prior quarter. This assumption is reasonable because over 90% of MFS shareholders fall into this category.
 
At present, the prospectus of every mutual fund contains an expense table listing the
various categories of fund expenses in basis points. The table might say, for instance:

Advisory Fee 53 bp
Transfer Agency Fee 10 bp
Other Fees 2 bp
12 b-1 Fee 25 bp
Total Expenses 90 bp
 
In addition, the prospectus of every fund includes a hypothetical example of a $10,000 investment in the fund to show the dollar amount of actual fund expenses paid by such a fund shareholder during the relevant period. The hypothetical example for the mutual fund with the expenses described above, for instance, would show $90 in total fund expenses over the last year.

Nevertheless, some critics have argued that mutual fund investors need customized
expense statements. By that, these critics mean the actual expenses paid by a shareholder in
 
3 of 6

several funds based on his or her precise holding period as well as the fund dividends during that
period. For example, we would have to compute the exact expenses of a shareholder who held
Fund A from January 15 until March 31 without reinvesting fund dividends; another shareholder
who held Fund B for the whole year and reinvested all fund dividends; and yet another
shareholder who held Fund C from February 1 until June 15 as well as from August 22 until
December 11 (during both periods, assuming no record date for fund dividends occurred).
This type of customized expense statement would, in my opinion, involve enormous
computer programming costs. The program would have to track the holdings of every fund
shareholder on a daily basis, take into account whether a fund dividend was reinvested or paid
out to the shareholder, and apply monthly basis point charges to fund balances reflecting monthly
appreciation or depreciation of fund assets. Of course, these large computer costs would
ultimately be passed on to fund shareholders.
At MFS, we will provide every fund shareholder with an estimate of his or her actual
expenses on their quarterly statements.2 We can do this at an affordable cost by making one
reasonable assumption—that the fund holdings of the shareholder at the end of the quarter were
the same throughout the quarter. Although this is a simplifying assumption, it produces a good
estimate of actual fund expenses since most shareholders do not switch funds during a quarter.
Indeed, this assumption will often lead to a slightly higher estimate of individualized expenses
than the actual amount because some shareholders will buy the fund during the quarter and other
shareholders will reinvest fund dividends during the quarter.
In addition, MFS will send its shareholders in every fund’s semi-annual report the
total amount of brokerage commissions paid by the fund during the relevant period as well as the
fund’s average commission rate per share (for example, 4.83 cents per share on average). But
this information on brokerage commissions should be separated from the fund expense table
because all the other items in the table are ordinary expenses expressed in basis points. By
contrast, brokerage commissions are a capital expense added to the tax basis of the securities
held by the fund, and brokerage commissions are expressed in cents per share.
2 These individualized expenses will not include brokerage costs because they are capitalized in the cost of the portfolio
security.

4 of 6

II. Enhanced Governance Structure

The mutual fund industry has a unique governance structure: the fund is a separate entity from its external manager. The independent directors of the fund must annually approve the
terms and conditions of the fund’s contract with its external manager. Of course, the independent directors usually reappoint the management company. In an industrial company, how often do the directors throw out the whole management team? But the independent directors of most mutual funds, in my experience, do represent fund shareholders by negotiating for contract terms and  monitoring potential conflicts of interest.
 
At MFS, we believe we have the most advanced form of corporate governance in the
industry. To begin with, over 75% of the board is comprised of independent directors, who elect their own independent chairman. The chairman leads the executive sessions of independent directors, which occur before or after every board meeting. The independent chairman also helps set the board’s agenda for each meeting. A lead independent director could definitely take charge of the executive sessions and a lead director could also help set the board’s agenda. Thus, it
does not matter which title is employed; the key is to insure that a senior independent director
plays these two functions.
In many boards, the independent directors have their own independent counsel, as
the MFS boards do. But the independent directors of the MFS funds are going one step further by
appointing their own compliance officer. This officer will monitor all compliance activities by MFS
as well as supervise the fund’s own activities, and will report regularly to the Compliance
Committee of the Board (which itself is composed solely of independent directors).
On the management company side, MFS is the only company I know of that has a
non-executive chairman reporting to the independent directors of the MFS funds. This is a new
position designed to assure that the management company is fully accountable to the funds’
independent directors.

Finally, MFS as a management company has established the new position of Executive Vice President for Regulatory Affairs, and filled the position with a distinguished industry veteran. In addition, MFS has hired a distinguished law firm partner as its new general

5 of 6
 
counsel. Both will serve on the executive committee of MFS. The new Executive Vice President will be in charge of several regulatory functions—compliance, internal audit and fund treasury.

This high profile position within MFS is more than symbolic; it represents the great significance
given by MFS to these regulatory functions. While these functions are performed in most fund
management companies, it is rare to see the person in charge of these functions having the title of executive vice president and serving on the executive committee of the firm.

Conclusions

In summary, MFS is trying to establish standards of best practices in three important
areas to fund shareholders: 
 
1) reduced reliance on “soft dollars”, 
 
2) individualized expense reporting, and 
 
3) enhanced governance structure. Other management firms are trying to take the lead in setting industry standards in other areas. At the same time, the SEC is in the process of
proposing and adopting a myriad of rules on disclosure requirements and substantive prohibitions or the fund industry—which overlap to a degree with the efforts of the fund management firms.

Because the SEC and the management firms are making such serious efforts to develop
higher behavioral norms for the mutual fund industry, it might be useful for Congress to monitor these efforts before finalizing a bill on mutual fund reforms. These are complex issues that may be better suited to an evolutionary process, led by an expert public agency with the flexibility to address the changing legal and factual environment.
 
Thank you again for this opportunity to testify on mutual fund reform. I would be pleased
to answer any questions the Chairman or Committee Members might have. 
 
6 of 6
 
 
 
 
 
 

Robert C. Pozen


  • Former president of Fidelity Investments and executive chairman of MFS Investment Management
  • Expert who has made hundreds of appearances to companies, television audiences and leaders around the world
  • Writer for the New York Times, the Wall Street Journal, the Financial Times, the Harvard Business Review, and more around the globe

Support Staff

Kimberly Crumpton

(617) 324-7519
kimc714@mit.edu

Get in Touch

 
 
 
 
Posted by at

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)