UBS to acquire Schwab’s SoundView Capital Markets unit for $265 million

NEW YORK — UBS agreed to acquire Charles Schwab's SoundView Capital Markets unit for $265 million in cash, both firms announced. UBS will acquire Schwab's proprietary trading technology; institutional sales and trading business; over-the-counter, listed and Nasdaq market-making operations; and correspondent business. For the next eight years, UBS will handle Schwab's equity and listed options order flow. The deal is expected to close in the fourth quarter, subject to regulatory approval.

"The company has made the strategic decision to intensify its focus on Schwab's core business of serving individual investors and independent financial advisers who work with them," said Charles R. Schwab, Schwab chairman and chief executive officer, in a news release. "The sale of our capital markets business reflects an important outcome of that decision."

BOSTON — Fidelity Investments reduced the fees of five Fidelity Spartan equity index funds available to group retirement plan investors. The expense ratios for the 500 Index, Total Market Index, Extended Market Index, International Index and U.S Index funds will be capped at 0.1%, or 10 basis points, according to a news release from Fidelity. The funds are offered primarily to 401(k) and 403(b) defined contribution plans.

BOSTON — Dodge & Cox officials announced the firm will close the Balanced Fund to new investors at the close of business on Sept. 10. As of July 31, the fund had $17.3 billion. According to Financial Research Corp. data, the fund took in about $4.5 billion in net inflows between January 2003 and February 2004. The fund will remain open to additional investments from existing shareholders.

HARRISBURG, Pa. — The $25.3 billion Pennsylvania State Employees' Retirement System returned 20.7% on its investments for the year ended June 30, said Sean Sanderson, spokesman. Returns for the quarter ended June 30 were not available. The fund returned a compound annualized 10.4% for the 10-year period.

WASHINGTON — Deutsche Bank Securities and Thomas Weisel Partners agreed to pay a total of $100 million in a settlement with the SEC, state securities regulators, the NASD and the NYSE over charges of conflicts of interest between the firms' research and investment banking units.

The settlements are related to the April 2003 $1.4 billion global settlement that 10 other investment banks reached with the SEC, state regulators, the NASD and the Big Board after charges that investment banking had undue influence on securities research at brokerage firms. The firms did not admit or deny the allegations in the settlement.

Deutsche Bank Securities will pay $87.5 million and Thomas Weisel will pay $12.5 million, according to a news release from the SEC, North American Securities Administrators Association, NASD, NYSE and the California Department of Corporations. The money will go to customers of the firms and state securities regulators, as well as to fund independent research.

"We are pleased to reach this final resolution with the Securities and Exchange Commission, California Department of Corporations, and other state and federal regulators and join the global settlement," said Rohini Pragasam, Deutsche Bank spokeswoman, in a statement. Ann Akichika, Thomas Weisel's director of marketing and corporate communications, said: "We are pleased to have reached a resolution of this matter."

AUSTIN, Texas — The $20 billion Employees Retirement System of Texas plans to increase its high-yield bond and small-cap and midcap equity allocations, while cutting its fixed-income portfolio, said Mary Jane Wardlow, spokeswoman. High yield will be raised to 8% of total assets, from 4%; small-cap and midcap equities will be a combined 7%, from 4%; and fixed income will be cut seven percentage points to 30%. Large-cap equities will remain at 37%, while international stocks will stay at 18%. The changes, approved by the board on Aug. 25, were the result of an asset allocation study.

The system's investment committee has not decided how to implement the changes, and no new searches are planned, Ms. Wardlow said. Callan Associates assisted.

DENVER — Colorado Public Employees' Retirement Association reported that its liabilities exceeded assets by $9 billion at the end of 2003, according to an audit PricewaterhouseCoopers performed for the state's Legislative Audit Committee. The association had $30.1 billion in assets as of Dec. 31. A state law increases employer contribution rates to 13.15% by 2012 from 10.15% now; the increase will be phased in starting in 2006. With the changes, the plan's funded ratio is expected to decrease to 60.4% by 2030, from 76% now; without the legislative changes, the funded ratio would have decreased to 34.5%. PricewaterhouseCoopers recommended the state make additional contributions to help make up for the shortfall. Katie Kaufmanis, association spokeswoman, did not return phone calls by deadline seeking comment.

LOS ANGELES — The Los Angeles City Employees' Retirement System earned 18.6% for the year ended June 30, placing the $7.8 billion plan in the sixth percentile among public funds with more than $1 billion in assets, said Daniel P. Gallagher, chief investment officer. The system's three-year return is an annualized 5.66% and the five-year return is an annualized 4.59%.

WASHINGTON — Seven Wall Street brokerage firms on Aug. 25 agreed to pay a total of $3.65 million to settle SEC charges that they did not disclose payments they received for research coverage of certain public companies, according to a news release from the SEC. The firms — Needham & Co.; Janney Montgomery Scott; Morgan Keegan & Co.; Prudential Equity Group; Adams Harkness; Friedman, Billings, Ramsey & Co; and SG Cowen & Co. — did not admit or deny the charges as part of the settlement.

The SEC said the firms received payments from other broker-dealers between 1999 and 2002 for research on certain public or soon-to-be public companies that the broker-dealers were underwriting.

HONOLULU — Hawaii Laborers Pension Plan filed a lawsuit against executives and directors of Tractor Supply Co., Brentwood, Tenn., alleging mismanagement, according to the company's 10-Q filing. The pension fund is seeking unspecified damages and costs in the suit, filed in Davidson County Chancery Court in Nashville.

Tractor Supply officials said the firm was named as a "nominal defendant" in the suit. The $248 million pension fund alleged breaches of fiduciary duty, acts of bad faith, abuse of control, mismanagement, waste of corporate assets, unjust enrichment and other violations of Tennessee law related to preparation of the company's financial statements. Tractor Supply has filed a motion to dismiss the suit.

GREENSBORO, N.C. — The 50 largest U.S. financial institutions each use at least one supplemental retirement plan to help retain and attract key executives, according to an analysis by executive benefits consultant The Todd Organization.

Of those institutions, 96% offer at least one voluntary deferred compensation plan; 80% offer a supplemental executive retirement plan that will pay a defined benefit; and 74% have a defined contribution matching program. And 88% also offer at least one enhanced insurance benefit to executives; 76% offer post-retirement medical coverage.

"America's largest financial services companies place a high value on retaining key executives," Ron Roth, Todd Organization executive vice president, said in a statement. "The cost for replacing such executives can be tremendous. It makes more sense than ever to design programs that provide compelling retirement benefits, particularly as a growing number of these institutions' executives are at the beginning of the baby-boom generation and now approaching retirement."

TACOMA, Wash. - Russell indexes will add initial public offerings on a quarterly basis, beginning Sept. 30, when an estimated 40 IPOs will be added. On Sept. 15, Russell will announce the IPOs that qualify.

Russell will rank all recent IPOs as of Aug. 31 relative to market-capitalization breaks of the indexes, adjusted for performance from the June reconstitution.

The smallest of the Russell 1000 stocks had a market cap of $1.6 billion, and smallest of the Russell 2000, $175 million, said Lori Richards, senior product manager, Russell indexes. Russell will not delete existing index members to make room for the IPOs, waiting until the annual reconstitution to make such changes. Russell's methodology for IPO additions will be stated on its website at www.russell.com.

Adding IPOs in a more timely way will "enhance how well each index reflects its segment of the U.S. equity market," according to a Russell Investment Group statement.

Google Inc., with a market cap of almost $27.8 billion as of Aug. 31, could be the most prominent inclusion in the large-cap Russell 1000. Ms. Richards said nothing in Russell's criteria would preclude Google from inclusion, but she declined to confirm any company addition.

SPRINGFIELD, Mass. - The Hampden County Board of Retirement plans to select a private real estate manager shortly after Labor Day to run $9 million, said Julianne Bartley, executive director. Officials at the $175 million system began the search in March to fulfill its 5% allocation to real estate. Segal Advisors is assisting.

NEW YORK - KKR Financial Corp. closed a $780 million new real estate investment trust, which will be managed by an affiliate of Kohlberg Kravis Roberts, according to an SEC filing by the deal's underwriter, Friedman Billings Ramsey. The transaction involved selling 78 million common shares at $10 per share to a firm that is exempt from SEC filings, according to the document. Further details were not available.