At the Bell

3 Heartland funds have assets frozen

* About $30 million in assets of three Heartland Group Inc. muni junk bond funds were frozen and placed in receivership Thursday by the Securities and Exchange Commission.

The SEC took action because the funds could not produce audited financial reports, says Tim Warren, associate regional director of the SEC’s office in Chicago. The reports are due in March. “Their auditor had concerns regarding the valuation of the securities in the three funds,” he says.

The funds are the High-Yield Municipal Bond Fund, the Short Duration High-Yield Municipal Fund and the Taxable Short Duration Municipal Fund. The prices of the funds were devalued last October, when the Milwaukee investment company had problems valuing the securities held in them.

Heartland issued a press release saying that the action was taken with its consent. Audited financials have been furnished to shareholders for all its funds other than the three high-yield funds, the company says.

House panel votes tax aid to couples

* The House Ways and Means Committee last week cleared a bill that would erase the so-called marriage penalty on taxpayer couples by 2002.

The provision would increase the basic standard deduction for married couples to $9,100, from $7,600, amounting to twice the standard deduction for an unmarried taxpayer.

The committee voted 23-16 along party lines to send the bill to the full House for a vote.

The $400 billion tax relief bill, supported by Republicans, also includes provisions to expand the available child tax credit to $1,000, from $500, by 2006.

The House may vote on the bill as early as this week.

Two from N.Y. Life named in kickbacks

* Two former employees of New York Life Insurance Co. who traded mortgage-backed securities for the company’s proprietary accounts were charged Thursday by the SEC with receiving kickbacks and other improper gifts from salespeople at three brokerage firms.

Named were Anthony Dong-Yin Shen, 27, of New York, and Srinivas Anumolu, 37, of Sunnyvale, Calif., both of whom worked for New York Life in the mid- to late 1990s.

The SEC also brought charges against three salespeople: Ronald Pinto, 40, of Demarest, N.J., with Nomura Securities Inc. from 1987 until late last year; Deborah Breckenridge, 44, of Old Town, Fla., with SunCoast Capital Group Ltd. from 1993 to `99; and Dominick Savino, 37, of New York, with Greenwich Capital Markets from 1998 through 2000.

The SEC said the New York Life traders received more than $400,000 for directing securities transactions to the brokerage salespeople, who got more than $3 million in compensation for the transactions, which were often at prices favorable to the brokers but detrimental to New York Life.

The U.S. attorney in New York also announced criminal charges against Mr. Shen, Mr. Anumolu, Mr. Pinto and Ms. Breckenridge. Mr. Shen pleaded guilty Thursday to securities fraud, a spokesman for the U.S. attorney said. A lawyer for Mr. Pinto said his client would plead not guilty. Mr. Savino also denied the SEC’s allegations.

SEC plans release on issues with ETFs

* The SEC is working on a concept release regarding actively managed exchange-traded funds, the agency announced last week.

ETFs are fundlike products that track specific indexes but trade continuously like stocks.

The SEC says some Wall Street companies are trying to figure out how to structure actively managed ETFs, raising concerns about how they would fit into the regulatory framework.

Correction

* In last week’s Power Elite special section, a quote from John Hancock Financial Services Inc. CEO David D’Alessandro should have read: “A lot of mutual companies go public, and they act like Santa Claus just arrived.” Also, Mr. D’Alessandro is 50 years old.