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Section 529 college savings plans are tax-favored investment vehicles, which saw tremendous growth after the Economic Growth and Tax Relief Reconciliation Act of 2001 expanded 529 plan benefits to include tax-free distributions for qualified higher education expenses. However, regulators, the press, and fund advisors criticized the Section 529 college savings plan industry for inadequate and nonuniform disclosures of investor information, such as historical returns, fees, taxes, and underlying investments. We investigate consumers’ investment choices after a disclosure regime change in 2003 and find that after enhanced disclosures became widely available, investors selected fewer plans offered exclusively through brokers, increasingly chose portfolios based on past investment performance, but remained unresponsive to state tax benefit disclosures. We also analyze the plans’ performance and find evidence that 529 investors are constrained to invest in portfolios with high, return-eroding fees. Nearly 20 percent of the portfolios have a statistically significant negative alpha, the measure of risk-adjusted excess return, while less than 1 percent have a statistically significant positive alpha.

To explain FINRA’s new 529 Plan Share Class Initiative, which encourages broker-dealers to self-report violations.

This article provides an overview of 529 plans, the various fee structures of the underlying investment funds, and guidance that broker-dealers should tailor their recommendations to the needs of the individual customer. The article discusses FINRA’s initiative for broker-dealers to self-report if they have violations in this area. It describes various supervisory failures brokerage firms may experience in connection with recommending 529 plans, eligibility for the self-reporting initiative and benefits of self-reporting.

This FINRA initiative provides an opportunity for firms to reflect on their supervisory systems and provide restitution to harmed customers. It also provides relevant fee-based investment information to customers.

529 plans are valuable tax-advantaged tools to encourage saving for the future educational expenses of a designated beneficiary. If brokerage firms lack reasonable supervisory procedures to recommend appropriate investments based on the length of the investment horizon, this FINRA initiative provides a unique and limited opportunity for firms to assess their supervisory systems and procedures governing 529 Plan share-class recommendations, to identify and remediate any defects, and to compensate any investors harmed by supervisory failures, while possibly avoiding fines for such conduct.

Expert guidance from experienced financial services regulatory and public finance lawyers.

College savings plans established and maintained by states as “qualified tuition programs” under Section 529 of the Internal Revenue Code, as amended, are increasingly popular vehicles for accumulating savings on a tax‐advantaged basis to pay college expenses. All states and the District of Columbia currently offer, or soon will offer, these so‐called 529 college savings plans. Although structurally quite similar to registered mutual funds or “funds of funds” subject to the Investment Company Act of 1940, as amended (the “Investment Company Act”), 529 college savings plans raise unique securities law issues as a result of their being state investment programs. This article outlines the general framework of the federal securities law treatment of investments in 529 college savings plans and then explores in greater depth the basic disclosure issues that broker‐dealers face when marketing 529 college savings plans to customers.

The librarian and researcher have to be able to uncover specific articles in their areas of interest. This Bibliography is designed to help. Volume IV, like Volume III, contains features to help the reader to retrieve relevant literature from MCB University Press' considerable output. Each entry within has been indexed according to author(s) and the Fifth Edition of the SCIMP/SCAMP Thesaurus. The latter thus provides a full subject index to facilitate rapid retrieval. Each article or book is assigned its own unique number and this is used in both the subject and author index. This Volume indexes 29 journals indicating the depth, coverage and expansion of MCB's portfolio.

Recent news articles about pension funding issues highlight the importance of transparent financial reporting and disclosures for defined benefit pension plans. Using pension-related data for local governments in Michigan and Pennsylvania, we provide descriptive evidence regarding the actuarial methods and assumptions adopted and the factors that explain a government’s propensity to adopt optimistic actuarial methods and assumptions that reduce the annual required contribution. Our descriptive data suggests that actuaries are making aggressive assumptions for some governments' pension benefits. Our regression results also suggest there is an association between monitoring mechanisms, fiscal constraints, and socioeconomic factors and the choice of optimistic actuarial methods and assumptions that reduce the annual required contribution. The GASB should consider our findings as they determine whether existing standards should be clarified or whether allowable actuarial methods and assumptions should be restricted.

The focus on supervision began in the 80’s when the insider trading scandal resulted in visions of Wall Street investment bankers in handcuffs being led away from their offices. The New York Stock Exchange was on the hot seat for perceived failings. The 90s were dominated by the “price‐fixing” scandal in the over‐the‐counter markets, with OTC traders and the NASD sharing the limelight. Then there were mutual fund late trading, research, variable annuities, 529 college savings plans, etc., Now a branch manager in Cleveland, Ohio has precipitated a new wave of supervisory rules.