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Waddell & Reed, founded in 1937, is one of the oldest mutual fund complexes in the United States, having introduced the Waddell & Reed Advisors Group of Mutual Funds in 1940. The headquarters is in Kansas City, Missouri Waddell and Reed puts investment products through the ''Waddell & Reed Advisors channel'' (our network of financial advisors), our Wholesale channel (encompassing broker/dealer, retirement, registered investment advisors as well as the activities of our Legend subsidiary), and our Institutional distribution effort (including defined benefit plans, pension plans and endowments, as well as the activities of ACF and our subadvisory partnership with Mackenzie in Canada .) Through its subsidiaries, Waddell & Reed Financial, Inc. provides investment management and financial planning services to clients throughout the United States. Waddell & Reed Investment Management Company serves as investment advisor to the Waddell & Reed Advisors Group of Mutual Funds, W&R Target Funds, Inc. and Waddell & Reed InvestEd Portfolios , Inc., while Ivy Investment Management Company serves as investment advisor to Ivy Funds, Inc. and the Ivy Funds portfolios. Waddell & Reed, Inc. serves as principal underwriter and distributor to the Waddell & Reed Advisors Group of Mutual Funds, W&R Target Funds , Inc. and Waddell & Reed InvestEd Portfolios , Inc., while Ivy Funds Distributor, Inc. serves as principal underwriter and distributor to Ivy Funds, Inc. and the Ivy Funds portfolios. {Link without Title} Waddell & Reed said it had changed its business practices for the sale of mutual fund shares, including imposing fees for short-term sales and greater oversight of investor activity. Last year, Waddell & Reed agreed to repay up to $11 million to clients after industry and state regulators said the firm improperly switched customers from one annuity investment to another. Waddell & Reed also was fined $7 million. {Link without Title} New York State Attorney General Eliot Spitzer today (July 24, 2006) announced an agreement with Waddell & Reed to settle charges that the firm permitted illegal trading of its funds. Under the settlement, Waddell & Reed, Inc., based in Kansas City, agreed to pay $50 million in restitution to investors and make fee reductions totaling $25 million over the next five years. The company also will adopt a series of management reforms. "The evidence in this case showed that company officials didn’t just look the other way at timing activities, they facilitated the transactions with full knowledge that small investors were being harmed,” Spitzer said. Spitzer’s investigation found that Waddell & Reed managers had entered into secret agreements with mutual fund timers. Under these agreements, the timers paid extra fees to Waddell & Reed in exchange for trading privileges that were denied to typical investors. Specifically, in exchange for fees ranging from 1/4 percent to 1 percent of the timers’ money, the company exempted the timers from trading limits and other anti-timing policies put in place to protect long-term investors. Investigation also determined that Waddell & Reed’s senior management knew that timing activity was harming the firm’s small investors, and yet the company did nothing to stop the harmful activity for a period of 18 months. During that time, the Company's prospectus created the false impression that Waddell & Reed vigorously policed timing activity. {Link without Title} Even as he disputes owing millions in federal income taxes, Keith A. Tucker, the former head of Waddell & Reed is trying to avoid paying Kansas City $1.23 million in earnings taxes. Tucker has mounted the challenge even though he and his wife occupied one of the city’s most lavish homes, a historic mansion on Ward Parkway, for more than seven years and lived in a Kansas City condominium complex for nearly seven years before that. The state tax rate is 6 percent, and during the years at issue — 1999 through 2003 — Tucker pulled down $74.3 million in wages and compensation. After Tucker resigned from Waddell & Reed, he and his wife moved from Kansas City to Dallas. Their home on Ward Parkway was sold last year for $6 million, more than three times what they paid for it in 1998. Tucker doesn’t deny living in the Ward Parkway home or using it to entertain. But he insists that his state of residency is Texas. Texas doesn’t have a state income tax. Tucker and his wife have also been battling the IRS for the last two years over tax deductions the couple took in 2000. The IRS contends that they claimed $39.2 million in sham tax-shelter deductions and owe the government $21.7 million in income taxes and penalties. The tax shelters were devised by the accounting firm KPMG. Seventeen former KPMG executives, an attorney and an investment adviser are currently on trial in New York on criminal charges of marketing fraudulent shelters, filing fraudulent income-tax returns and concealing the shelters from the government. Last year KPMG agreed to pay $456 million to the government as part of a deferred prosecution agreement with the Justice Department. Posted on Fri, Aug. 18, 2006 REFERENCES EXTERNAL LINKS |
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