JPMorgan Sues American Century

September 22, 2011 (PLANSPONSOR.com) - JPMorgan Chase & Co. has sued American Century, claiming it wasn’t informed about an $848 million optioned share sale to Canadian Imperial Bank of Commerce (CIBC).

 

According to Bloomberg news, a public version of the complaint filed in Delaware Chancery Court claims that American Century failed to disclose material information regarding the sale, which was completed a few weeks ago, and that the shares were not purchased at their fair market value.  The complaint was initially filed under seal, according to the report.

Earlier this summer CIBC had agreed to buy a 41% stake in American Century from JPMorgan, which had purchased a holding of about 45% in American Century for about $900 million in January 1998.  Under a 2009 option agreement between American and JPMorgan, American could purchase all of the shares JPMorgan owned in the firm and resell them to a third party.

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JPMorgan said in its complaint that it learned of the share sale through a public announcement. “American Century improperly withheld information regarding the CIBC stock sale from JPMorgan’s director designee on American Century’s board,” lawyers for the bank said in the redacted complaint, according to Bloomberg.  American Century “understated its financial position” to an independent adviser, causing a report that served as the basis for the share repurchase to understate the firm’s fair market value, according to the complaint.

JPMorgan is seeking a trial to determine unspecified damages.

American Century manages approximately $111 billion in assets for a diversified mix of institutional, intermediary and retail investor clients.  CIBC holds 10.1% of American Century’s voting rights and appoints two representatives to its 10-person board.

The case is JPMorgan Chase & Co. v. American Century Companies Inc., CA6875, Delaware Chancery Court (Wilmington.)  

Morningstar Expands ETF Resources

September 22, 2011 (PLANSPONSOR.com) -   Morningstar, Inc. announced plans to launch rankings and research on exchange-traded fund (ETF) managed portfolios later this year.
 

ETF managed portfolios are primarily separate account strategies that have more than 50% of a portfolio’s assets in ETFs, according to Morningstar. Of the more than 330 ETF managed portfolios with about $22 billion in assets currently tracked by Morningstar, approximately 30% were launched within the past three years and the number continues to increase.

“ETF managed portfolios are a burgeoning area. By expanding the research available for ETF managed portfolios, we aim to increase the awareness and transparency of this rapidly growing area of the industry,” said Andrew Gogerty, ETF managed portfolios strategist for Morningstar. “These strategies typically offer greater tactical flexibility than a traditional individual security separate account strategy, but no other firm is providing commentary, research, and education for advisers in this area. Our goal is to develop a suite of analytics and commentary that will help advisors and other investors who are sifting through these investment options.”

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Morningstar is also creating a proprietary classification system for ETF managed portfolios, which advisers can use to screen offerings based on the portfolio’s strategy attributes to make meaningful comparisons. More information about the classification system is available at http://global.morningstar.com/ETFManagedPortfoliosClassification. More information about our rankings and research for ETF managed portfolios is available at http://global.morningstar.com/ETFManagedPortfoliosFactSheet.

Morningstar will rank ETF managed portfolios by performance against their peers within their classification grouping. The classifications for ETF managed portfolios differ from the Morningstar Category Classifications, which are applied to mutual funds, variable annuities, and separate accounts based on the underlying securities in each portfolio.

Morningstar plans to make the ETF managed portfolios rankings and research available through its adviser and institutional products, including Morningstar Advisor Workstation, Morningstar Office, and Morningstar Direct.  Selected content from the ETF managed portfolios database will also be available on Morningstar.com in early 2012.

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