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SEC leader: Brokers should not be lured

Published Sep. 13, 2005

U.S. Securities and Exchange Commission chairman Arthur Levitt said securities industry regulators should consider banning brokerages' use of some financial incentives to lure brokers from other firms.

Levitt, in a speech to brokerage lawyers and compliance officers, condemned securities firms' payments of up-front bonuses and temporarily higher commissions to new brokers from another firm.

"I do not like either of these practices," Levitt told a Securities Industry Association conference in Scottsdale, Ariz.

Levitt asked the National Association of Securities Dealers, which polices all U.S. brokers, to examine whether up-front bonuses and temporarily higher commissions _ known as "accelerated pay-outs" _ create inherent conflicts of interest.

Vanguard to launch

3 equity index funds

NEW YORK _ The Vanguard Group, the nation's second-largest mutual fund company, said last week that it will launch three equity index mutual funds.

Of the $375-billion managed by the Valley Forge, Pa., company, $115-billion is in index funds.

Vanguard Mid Capitalization Stock Portfolio will track the Standard & Poor's MidCap 400 Index, investing predominantly in securities with market capitalizations from $1-billion to $7.5-billion.

Vanguard Small Capitalization Value Stock Portfolio will replicate the Standard & Poor's SmallCap 600/BARRA Value Index, which comprises some 380 stocks with lower-than-average price/earnings and price/book ratios. The fund will invest in companies with market caps below $1-billion.

Vanguard Small Capitalization Growth Stock Portfolio will track Standard & Poor's SmallCap 600/BARRA Growth Index, which comprises about 220 stocks with higher-than-average price/earnings and price/book ratios. It, too, will favor stocks with a market cap below $1-billion.

The funds become active May 20.

At the same time, Vanguard said it is closing the Vanguard Primecap Fund to new investors for the second time in the past three years after the fund's assets ballooned to $10.2-billion.

Existing shareholders will be allowed to make investments in the fund, the company said.

_ Compiled from Times wire and Bloomberg News reports.