At the Bell

Cut in SEC fees hits a snag in the House

* Agreement over a bill to cut securities transaction fees collapsed in the House last week when Rep. Dan Burton, the Indiana Republican who heads the Government Reform Committee, would not go along with giving pay raises to all the employees of the SEC.

The bill, which would reduce securities fees by $14 billion over 10 years to keep them in line with the SEC’s budget, also would raise SEC employee pay scales to equal those prevailing at federal banking agencies.

But Mr. Burton wants to give equal pay only to SEC examiners, accountants and lawyers.

Rep. Michael Oxley, R-Ohio, chairman of the House Financial Services Committee, told a meeting of the Securities Traders Association last week that the bill would be enacted eventually.

The Senate approved a similar bill in March.

Merrill set to close sick Internet fund

* After watching the obliteration of more than $700 million in investors’ cash, Merrill Lynch & Co. Inc. of New York wants to pull the plug on its ill-timed Internet Strategies Fund (InvestmentNews, April 9).

Launched in March 2000, two weeks after the peak of the Nasdaq Composite Index, the fund began with more than $1.1 billion. Now its directors are throwing in the towel, and they will ask the fund’s shareholders in August to approve a merger with Merrill’s Global Technology Fund, according to a filing last Friday with the Securities and Exchange Commission.

The fund lost 71% of its value from its start through the middle of last week.

Hedge funds draw cash and scrutiny

* Hedge fund investors are taking a more sophisticated and critical look at this class of alternative investments even though they invested $30 billion last year, according to a new survey.

The survey, conducted by Hennessee Hedge Fund Advisory Group in New York, shows that the average hedge fund investor allocated 37% of net worth to hedge funds last year, compared with the 33% they allocated in 1999.

And 45% said they planned to increase their allocation to hedge funds this year.

But according to Lee Hennessee, chairman of the Hennessee Group LLC, investors are not allocating without exercising a measure of caution.

Some 45% want better risk management, 6% want more liquidity, 5% would like to see an increase in regulatory oversight, and 4% want a greater degree of transparency.

Correction

* In an April 30 article, Robert Isbitts, president and chief investment officer of Emerald Asset Advisors, should have been quoted as saying that most of Mr. Isbitts’ clients have 5% to 15% of their portfolio invested in a variety of alternative investments, including the Calamos Market Neutral Fund.