TIME College Sports

The Long and Winding Road to Paying College Players

The man who helped win free agency for NFL and NBA players is seeking the same for college athletes

Over the past few months, the movement to pay college players has gained unprecedented momentum. In August, a federal judge ruled that college football and basketball players can earn a share of licensing revenues from the use of their name, image, and likeness. (The NCAA has since appealed the ruling.) An athlete can access these funds, which will be placed in a trust, when he or she has graduated or left the school. Schools can cap the pay, but the minimum cap is $5,000 per year.

This verdict in the so-called “O’Bannon” case – a former UCLA hoops star filed a lawsuit in 2009 after realizing he wasn’t being compensated for his likeness being used in a college basketball video game – came a few days after the NCAA voted to let schools in the Big 5 power conferences – the ACC, Big 10, Big 12, Pac 12 and SEC – have autonomy to write their own rules. These schools are prepared to give all their athletes a stipend that covers the full cost of attendance, which amounts to anywhere from $2,000 to $5,000 above the value of their athletic scholarships.

In March, a regional director for the National Labor Relations Board said that football players from Northwestern University could form a union, since these students act as employees of the school. Northwestern appealed the decision; the NLRB’s national office has yet to rule on the appeal. One just-released paper, to be published in the Hofstra Labor and Employment Law Journal, argues that the players should win.

(MORE: TIME Cover Story — It’s Time To Pay College Athletes)

However, an even bigger threat to the amateur model looms ahead: the lawyer who helped win free agency for NFL and NBA players is seeking the same open market for college athletes. Jeffrey Kessler, a partner at the Winston & Strawn law firm, filed an anti-trust lawsuit in March that could fundamentally alter college sports. The O’Bannon suit was limited to intellectual property rights: could athletes profit from their names, images, and likeness?

“We’re aiming to enjoin the restrictions placed on Division 1 basketball and major college football players from being compensated for their services, given the huge amount of revenue generated from these sports,” says Kessler, one of the top sports labor attorneys in the country. “What will be decided is whether it’s legal to have a rule that schools cannot compensate athletes at all.”

Kessler’s case won’t go to trial until fall of 2015, at the earliest. If he prevails, the courts may force the NCAA to adopt a true pay-for-play system, which the organization has long dreaded. The mechanics of paying players — do you just pay the football and men’s basketball players, and no one else? Should there be any limits? — are daunting. But the O’Bannon ruling sets some strong precedent for Kessler. The judge in that case, Claudia Wilken, may not have torpedoed the college sports model with her ruling. But she seems to invite someone else to do so.

Her opinion condemns the NCAA, and knocks down some of the most common justifications for limiting compensation for athletes to the value of the scholarship. “The evidence … demonstrates that student-athletes are harmed by the price-fixing agreement among FBS football and Division 1 basketball schools,” Wilken writes.

“It is also not clear why paying student-athletes would be any more problematic for campus relations than paying other students who provide services to the university, such as members of the student government or school newspaper,” Wilken writes in another section.

(MORE: College Athletes Need To Unionize, Now)

There’s nothing amateur about college sports. Conferences own their own television networks. Schools switched conferences to capture more revenues. Coaches salaries have skyrocketed: Newsday just reported that the average compensation for coaches in the Football Bowl Subdivision – the top tier of college football schools – is $1.75 million per year. That number has spiked nearly 75% over the past seven years. Athletes deserve their fair share.

Kessler picked the right time to mount a challenge. “There’s a growing recognition from the courts, the public, the fans, and even the schools that the current system is fundamentally unfair,” says Kessler. “We think change is coming.”

 

MONEY pimco

What You Need to Know About SEC’s Investigation of Pimco

The Securities and Exchange Commission is investigating one of Wall Street's best known money managers. Here is what you need to know.

On Tuesday, the Wall Street Journal reported that the SEC has been questioning whether Pacific Investment Management Company, more commonly known as Pimco, has been improperly valuing bonds in one of its portfolios to boost the fund’s returns.

While it’s too early to tell whether the SEC will ultimately allege Pimco did anything improper, here are three key takeaways:

This is another black eye for Bill Gross.

Bill Gross, often referred to as “the bond king,” is one of Wall Street’s highest-profile investors. His flagship fund, Pimco Total Return, is a mainstay in many 401(k) retirement plans. And with $220 billion in assets, the fund is one of the largest investment portfolios in the world.

Recently, however, Gross’s star has waned. Misplaced bets on Treasury bonds have hurt Total Return’s performance. Over the past year the fund has finished in the bottom tenth of its category, according to Morningstar.

Gross also recently endured a public split with protege and presumptive successor, Mohamed El-Erian, who left Pimco in March. Since then Gross, long a media darling, has even started to get bad press. This includes a much-talked about Wall Street Journal story making him seem like a difficult boss. Then there was a Bloomberg Businessweek cover story about Gross that asked, “Am I Really Such a Jerk?”

An SEC investigation only adds to his troubles.

The investigation highlights a long-running dispute about bond ETFs.

The SEC investigation appears to be targeting not Pimco’s flagship Total Return mutual fund but a smaller $3.6 billion exchange-traded fund version of Total Return created in 2012. The ETF version has won some fans, in part by outperforming its older sibling. You can read MONEY’s take on the pros and cons of the ETF version here.

Bond ETFs in general are wildly popular. Investors have poured in more than $180 billion since the financial crisis. But they’ve had their share of problems, and the latest controversy won’t help. To understand why, you have to grasp a bit of the nitty-gritty:

Exchange-traded funds are baskets of securities that trade on an exchange like a stock. Their original appeal to investors had a lot to do with their transparency. Investors can look up at any moment precisely what all of the securities in the ETF are worth. By contrast, traditional mutual funds only value their holdings once a day.

This extra transparency is pretty easy to accomplish when ETFs hold stocks, since most stocks trade every day and the prices are published by exchanges. With a little computing power, stock prices can be tallied up and the total published right away.

That’s not necessarily true of the bond market, where many individual bonds rarely change hands daily.

As a result bond ETF values, while still published continually, are really estimates based on trades of similar (but not necessarily precisely matching) bonds. The upshot is that while stock ETFs almost always trade at prices that are within a few pennies of their putative value, bond ETFs aren’t as reliable.

When traders who are buying bond ETFs disagree with official price estimates about the value of the bonds in the ETF’s portfolio, the ETFs can appear to trade at odd-looking prices.

The industry has endlessly debated what should be regarded as the “true” price. The Pimco controversy, as you see below, appears to have a lot to do with whether actual trades or some other estimate of a bond’s value should be regarded as the “true” price.

The investigation shows how complicated bond investing can be.

Pimco’s actions may have actually helped, not hurt, investors, based on the Wall Street Journal’s description. Still, this doesn’t mean the SEC is wrong to explore its actions.

Here’s what seems to be at issue: Bonds are typically traded in large blocks. When bonds aren’t part of these blocks they can be difficult — read expensive — to trade. Apparently, Pimco went around buying up small blocks of bonds, known as “odd lots,” at discounts. Pimco then marked their prices upwards using estimates of their values derived from larger blocks of bonds.

Is there anything wrong with this? It’s hard to tell because we can only speculate about how Pimco felt justified in doing it.

If Pimco really couldn’t resell the bonds at the new, higher prices it seems off base. But it also seems plausible the bonds might genuinely be worth more in Pimco’s hands than they were in the hands of whoever sold them.

Perhaps with Pimco’s enormous size it’s able to combine these small odd lots of bonds into a larger “round” lot, making the sum worth more than the parts. Or perhaps like a broker in any market, Pimco’s contacts and influence mean it can count on reselling the bonds at a higher price than the original owner could. The devil is in the details, which we don’t yet know.

One other thing to keep in mind. Even if this strategy was a smart one, the SEC may still be right to pursue the case. Allowing bond managers to think they have too much leeway with bond valuations is asking for trouble. Pimco’s investors may have benefited in this particular instance.

But regulators are probably right to be sticklers even if they did. Don’t forget that during the financial crisis big banks effectively hid billions in losses by using questionable methods to value bonds.

 

MONEY

How This Weekend’s College Football Rivals Stack Up as College Values

The college football season has kicked off. We looked at which of the schools in this weekend's games are the winners in Money's Best Colleges rankings.

  • Texas A&M v. University of South Carolina

    Left: Reveille cheers on the Texas A&M Aggies. Right: South Carolina Gamecocks mascot Sir Big Spur on his perch during the game.
    Brian Bahr/Getty Images (left)—Joe Robbins/Getty Images (right)

     

    When: Thursday Aug. 28, 6 p.m. EDT

    The Winner: Texas A&M, which came into the game ranked 21st in the AP poll, upset the 9th-ranked Gamecocks.

    MONEY’s pick for college value: Texas A&M.

    Texas A&M is one of the most affordable and highest quality public universities in the country. MONEY estimates that the total cost of a degree for freshmen starting this fall will average $86,000—$14,000 less than a degree from the University of South Carolina. Also, Aggies earn, on average, about $52,000 a year within five years of graduation, according to data from Payscale.com. Gamecocks report earning only about $41,300.

  • Penn State v. University of Central Florida

    When: Saturday, August 30, 8:30 a.m. EDT

    Oddsmakers’ pick to win: UCF is given a slight edge thanks to its returning veteran defensive line.

    MONEY’s pick for college value: Penn State

    True, Penn State is expensive—a degree costs Nittany Lions an average of $142,000, or $41,000 more than Knights pay for their degrees—but Penn Staters are much more likely to graduate and earn healthy salaries. Penn Staters report earning almost $51,000 within five years of graduation, almost $10,000 more than UCF grads.

     

  • Florida State University v. Oklahoma State University

    140828_FF_Rivalries_FSUOSU_2
    Getty Images

     

    When: Saturday, August 30, 8 p.m. EDT

    Oddsmakers’ pick to win: FSU, last year’s national champion, is also the top-ranked team this fall, and has top-notch players at nearly every position.

    MONEY’s pick for college value: It’s a tie.

    Schools within about 30 places in our value rankings are very similar, as shown by the slight differences between Oklahoma State, ranked 194, and FSU, 223. OSU’s graduation rate of 62% is significantly worse than FSUs 75%. But OSU students who do make it through tend to earn more: $44,400 a year within five years, versus FSU’s average of $41,600.

  • University of Miami v. University of Louisville

    When: Monday, Sept. 4, 8 p.m. EDT

    Oddsmakers’ pick to win: Louisville beat the Miami Hurricanes soundly in the 2013 Russell Athletic Bowl. But oddsmakers are giving them only a slight edge in the rematch.

    MONEY’s pick for college value: Louisville

    MONEY ranks Louisville No. 382 for value in the country–not great–in part because of its painfully low graduation rate of just 51% (compared with 81% for the University of Miami.) But as a public school, Louisville charges Kentuckians, on average, less than $100,000 for a degree, about half what students at the private Miami typically pay. Those high costs are one reason we ranked Miami 536 out of 665 on our list.

     

  • University of Notre Dame v. Rice University

    When: Saturday, August 30, 3:30 p.m. EDT

    Oddmakers’ pick to win: Notre Dame, even though some its best players have been sidelines by an academic investigation. The Fighting Irish are ranked 17 by the AP poll; Rice is unranked.

    MONEY’s pick for college value: It’s a tie.

    You really can’t lose with either of this schools. MONEY ranks both Notre Dame and Rice equally at 20th place for value. They both have stellar graduation rates of more than 90%. And students go on to earn salaries in the mid $50,000s within five years of graduation, according to Payscale.com. Notre Dame costs more (a degree costs about $185,000, versus $150,000 for Rice), but the higher cost was balanced out by unusually high earnings reported by Notre Dame’s non-science majors.

    See more of Money’s Best Colleges:
    The 25 Most Affordable Colleges
    The 25 Colleges That Add the Most Value
    The 25 Best Colleges That You Can Actually Get Into

TIME Money

Bank of America To Pay Record $16.65 Billion Fine

Bank Of America Reports Loss Due 6 Billion Dollar Legal Charge
Spencer Platt—Getty Images

$7 billion of it will go to consumers faced with financial hardship

Updated: 10:14 a.m.

The Justice Department announced Thursday that Bank of America will pay a record $16.65 billion fine to settle allegations that it knowingly sold toxic mortgages to investors.

The sum represents the largest settlement between the government and a private corporation in the United States’ history, coming at the end of a long controversy surrounding the bank’s role in the recent financial crisis. In issuing bad subprime loans, some observers say, the bank helped fuel a housing bubble that would ultimately burst in late 2007, devastating the national and global economy.

“We are here to announce a historic step forward in our ongoing effort to protect the American people from financial fraud – and to hold accountable those whose actions threatened the integrity of our financial markets and undermined the stability of our economy,” Attorney General Eric Holder said at a news conference announcing the settlement.

Since the end of the financial crisis, the bank has incurred more than $60 billion in losses and legal settlements. Of the latest settlement, $7 billion will go to consumers faced with financial hardship. In turn, the bank largely exonerates itself from further federal scrutiny.

However, not all is forgotten. The New York Times reports that federal prosecutors are preparing a new case against Angelo Mozilo, the former chairman and chief executive officer of Countrywide Financial, which Bank of America acquired in mid-2008. As the country’s largest lender of mortgages, Countrywide Financial purportedly played a large role in distributing toxic loans. Mozilo has already paid the Securities and Exchange Commission a record $67.5 million settlement.

MONEY financial advisers

Got a Beef With Your Broker? Wall Street, Attorneys Fight Over How to Fix Complaint Process

boxers in boxing match
Blend Images—Alamy

Wall Street and attorneys representing investors can't agree how to improve the arbitration system used to settle disputes between brokerages and their customers.

A proposal to strengthen the arbitration process that aggrieved investors use against securities brokers is running into obstacles just as the Securities and Exchange Commission prepares to consider it.

The plan, submitted in June by the Financial Industry Regulatory Authority, would ban securities industry veterans from serving as public arbitrators on the panels that decide cases filed by investors against their brokerages.

But now some investors’ attorneys who had pushed for the new rule are taking issue with the fact that it could apply to them as well. Other critics say the rule could be so stringent as to leave FINRA, an industry watchdog funded by Wall Street, without enough qualified arbitrators for the dispute resolution system it runs.

The SEC would have to approve the FINRA proposal for it to become a final rule.

FINRA arbitrators typically are considered “public” — those presently unaffiliated with the securities industry — and “nonpublic” — those with Wall Street ties. Many investors and their lawyers want a panel of three public arbitrators to hear their cases because non-public arbitrators may be biased in Wall Street’s favor, they say.

FINRA’s arbitration system has faced criticism for everything from not thoroughly vetting arbitrators to making it too easy for brokers for clean up their records. The plan addresses investor advocates’ criticisms that some arbitrators can be deemed “public” even if they previously worked in the securities industry for years.

The SEC solicited public opinions on the rule with a comment period that ended July 24. Separately, a new FINRA task force is conducting a broader review of the arbitration system.

Investors’ Lawyers Bite Back

One of Wall Street’s largest trade groups backs the proposal, but with a big condition.

In a July 24 letter to the SEC, the Securities Industry and Financial Markets Association said lawyers who represent investors should also be prohibited from acting as public arbitrators.

Firms and brokers would view arbitrators who have counseled investors as being biased against the industry, SIFMA wrote.

That view, already embodied in FINRA’s proposal, could hurt members of the Public Investors Arbitration Bar Association, a group of 450 lawyers who represent investors and a key force behind the push to weed out public arbitrators with Wall Street ties.

Under FINRA’s proposal, investors’ lawyers would not qualify as public arbitrators if they devoted more than 20 percent of their time within the past five years representing investors in disputes.

Similar restrictions would also apply to accountants and expert witnesses. They could become public arbitrators again, subject to certain restrictions, such as a hiatus from practice.

Lawyers and other professionals who have worked on behalf of the financial industry would be bound by similar rules.

But PIABA is already pushing back. The group has asked the SEC to reject language that would exclude lawyers and others who work on behalf of investors from being public arbitrators, according to its July 24 letter.

FINRA cites no evidence that professionals who serve investors would be biased, wrote Jason Doss, PIABA’s president. What’s more, the “non-public arbitrator” label has traditionally applied to arbitrators who have industry ties, he wrote.

FINRA declined to comment.

It is unclear how many of FINRA’s 3,560 public arbitrators would be deemed non-public. But too few arbitrators would strain the system. That is especially true when markets tank and claims spike, said George Friedman, an arbitration consultant and former director of FINRA’s arbitration unit.

“At the end of the day, we’re looking at fewer public arbitrators when we’re likely to need more going forward,” Friedman said.

MONEY investor protection

Why You Might Get Shut Out of Wall Street Deals

Exterior visual door security system
Rudi Tapper—Getty Images/iStockphoto

The SEC is reviewing its rules governing who can invest in privately traded securities.

A Securities and Exchange Commission review of its “accredited investor” rule could ultimately make it tougher for people to invest in privately traded securities — high-risk investments with potentially high rewards.

Under the rule, only well-heeled investors are permitted to buy these private placements — securities that are not registered with regulators or traded on exchanges. The idea is to protect Mom and Pop investors from the risks of these illiquid securities, typically issued by small or startup companies and sometimes found to be issued or sold fraudulently.

The criteria, in place since the rule was established in 1982 and never adjusted for inflation, generally require that investors have $1 million in assets or earn at least $200,000 a year to qualify to buy these securities.

But some critics want the SEC to impose other criteria, such as certain professions, arguing that net worth and income are not the best measures of investor sophistication. Others, including the U.S. Government Accountability Office, say the 1982 levels are too low.

The review marks the SEC’s first under the 2010 Dodd-Frank financial reform law, which requires one every four years. The SEC can develop new rules to change the standards but does not have to make any changes.

Investor advocates see the review as their chance to persuade the SEC to tighten requirements for buying the securities. In 2011, Dodd-Frank required the SEC to exclude the value of an investor’s primary residence from the net worth calculation, but the securities still are reaching investors who lack the financial sophistication to take on the risk, they say.

Companies that issue the securities worry that changes could limit their access to capital.

Small brokerage firms that often sell private securities can earn commissions of roughly between 7 percent and 9 percent.

The SEC’s Investor Advisory Committee discussed the issue at a July 10 meeting and expects to propose recommendations when it reconvenes in October.

SEC staff members have met directly with other groups, including the Angel Capital Association, a trade group for investors in start-ups, and the Public Investors Arbitration Bar Association, an organization of lawyers who represent investors in securities arbitration disputes.

JOBS Act Interactions

Consumer advocates have become more concerned about the accredited investor rule because of a related issue raised by the 2012 Jumpstart Our Business Startups Act, which loosened a long-standing ban on advertising the offerings.

Under that law, issuers may advertise their private offerings to mass consumers, such as in television commercials, even though their sale is still restricted to accredited investors.

“Thanks to the JOBS act, once private offerings are now essentially public offerings,” said Barbara Roper, investor protection director of the Consumer Federation of America, and a member of the SEC’s Investor Advisory Committee. Her concern: that unsophisticated investors who meet the requirements of “accredited investor” advertising will see those pitches and buy in.

The SEC could leave the financial thresholds in place but limit the percentage of total assets that someone can invest in private offerings, Roper said.

Another choice would be to deem some investors as “sophisticated” because of their professions. Accountants and certified financial analysts, for example, would be deemed savvy enough to take on the risk. SEC Chair Mary Jo White described the approach as possible “alternative criteria” in a letter to U.S. lawmakers last year.

The SEC declined to comment on its review and would have to vote on any changes.

MONEY financial advisers

Political Campaigns Can Be Hazardous for Financial Advisers

Political campaign supporters
Blend Images - Hill Street Studi—Getty Images

A Pennsylvania firm agreed last month to pay a $300,000 fine after the SEC alleged it had violated campaign-contribution rules.

Election season is under way, which means opportunities are mounting for public retirement plan advisers to do the wrong thing.

Investment advisers and certain employees who donate to many types of political campaigns are not allowed to advise state and local governments for two years, according to a 2010 U.S. Securities and Exchange Commission rule. Advisers who stray over that line can face tough consequences.

The SEC’s “pay-to-play” rule is in place to prevent advisers from using campaign contributions to persuade state and local governments to hire them. States, municipalities and government agencies typically have their own versions.

Advisory firms that fail to follow those rules can face hefty penalties.

In the SEC’s first such enforcement case against an investment adviser, TL Ventures Inc agreed on June 20 to pay nearly $300,000 to end charges that it received advisory fees from state and city pension funds after one of its associates had donated to a Philadelphia mayoral candidate and the Pennsylvania governor in 2011.

The Wayne, Pa., private equity firm neither admitted nor denied the SEC’s allegations.

The case is rattling advisers, said New York lawyer Jisha Dymond, who counsels companies and candidates about political law.

MANY MINEFIELDS

Advisers must also slog through other versions of pay-to-play rules from individual states and municipalities, Dymond said.

Among the concerns: conflicts between the rules. In New Jersey, for example, advisers to public pensions cannot contribute to state political party committees. But the SEC does not impose that restriction, Dymond said. Advisers can, however, get in trouble with the SEC for pushing others to contribute to political parties.

“In an election year, there’s so many different ways to hit a trip wire in terms of compliance,” Dymond said.

In the coming months, gubernatorial elections will be held in 36 states and U.S. three territories, according to the National Governors Association. That is in addition to state and municipal elections slated for November.

The SEC rule applies mainly to advisory firm executives and employees responsible for snagging business from state and local governments.

It typically does not involve federal elections, such as U.S. Senate campaigns for November midterm elections. But it could kick in when a state governor runs for a federal office. That is because he or she can still influence the selection of state financial advisers, said Ronald Jacobs, a Washington lawyer who specializes in political law.

ELECTION PREP

Now is an ideal time for firms that advise pensions to review their campaign donation procedures and the various rules, lawyers say.

Remind employees who fall under the rule that the firm’s compliance staff must approve their contributions in advance, said Jacobs.

Some advisers simply ban contributions. “It’s easier than trying to figure out nuances,” said Stefan Passantino, a Washington lawyer who advises companies and candidates on pay-to-play issues.

But that might be overkill, Jacobs said. Many advisory firms limit their business to a specific state or municipality, or their employees live in a certain area. That makes it easy to decide which rules apply.

MONEY

Does Anybody Need a Money-Market Fund Anymore?

New regulations are meant to protect money market mutual funds from another 2008-like panic.

On Thursday, the Wall Street Journal reported that the Securities and Exchange Commission is expected to approve new regulations for money-market mutual funds. Remember money-market funds? Before the financial crisis, these funds were very popular places to stash money because each share was expected to maintain $1 value. Your principal would remain the same, and the fund would pay substantially higher interest rates than a bank savings account.

But these days for retail investors, money-market mutual funds are something of an afterthought.

So why is the SEC intent on regulating them now? And will tighter rules push them further into irrelevance? Here’s what you need to know:

What going on?

A money-market fund is a mutual fund that’s required by law to invest only in low-risk securities. (Don’t confuse funds with money-market accounts at FDIC-insured banks. These rules don’t affect those.)

There are different kinds of money-market funds. Some are aimed at retail investors. So-called prime institutional funds, on the other hand, are higher-yielding products used by companies and large investors to stash their cash. The big news in the proposed rules affects just the prime institutional funds.

Prime institutional funds would have to let their share price float with the market, effectively removing the $1 share price expectation.

The SEC reportedly also wants to impose restrictions preventing investors from pulling their money out of these funds during times of instability, or discouraging them from doing so by charging a withdrawal fee. It’s unclear from the reporting so far which kinds of funds this would affect.

Why is the SEC doing this?

As MONEY’s Penelope Wang wrote in 2012 when rumors of new regulations were first circulating, the financial crisis revealed serious vulnerabilities to money-market funds. When shares in a $62 billion fund fell under $1 in 2008, it triggered a run on money markets.

In order to stabilize the funds, Washington was forced to step in and offer FDIC insurance (the same insurance that protects your bank account). That insurance ran out in 2009, and now the funds are once again unprotected against another run.

The majority of the SEC believes a primary way to prevent future panics is to remind investors that money-market funds are not the same as an FDIC-insured money-market account at a bank. Before the crisis, the funds seemed like a can’t-lose proposition. The safety of a savings account with double the return? Sign me up. But as investors learned, you actually can lose.

What does it mean for you?

Not much, at least not right away. The floating rate rules only apply to prime institutional funds, which the Wall Street Journal says make up about 37% of the industry.

The change also won’t be very important until money-market funds look more attractive than they do today. Historically low interest rates from the Federal Reserve have actually made conventional savings accounts a more lucrative place to deposit money than money-market funds. The average money-market fund returns 0.01% interest according to iMoney.net. That’s slightly less than a checking account.

Investors have already responded to money funds’ poor value proposition by pulling their money out. In August of 2008, iMoney shows there was $758.3 billion invested in prime money fund assets. In March of 2014, that number had gone down to $497.3 billion.

Finally, it appears unlikely that money-market funds will ever be as desirable as they were pre-crisis. As the WSJ’s Andrew Ackerman points out, money funds previously offered high returns, $1-to-$1 security, and liquidity. Interest rates have killed the returns, and the new regulations will limit liquidity and kill the dollar-for-dollar promise.

Don’t count the lobbyists out yet

Fund companies are really, really unhappy about the SEC’s proposed regulations. They’ve been fighting the rules for years, and until there’s an official announcement, you shouldn’t be sure anything is actually going to happen.

Others are worried the new regulations, specifically redemption restrictions, might actually cause runs on the market as investors fear they could be prevented from pulling money out if things get worse.

But the SEC may have picked a perfect time to do this. With rates so low, few retail savers care much about money-market funds. That wasn’t true back when yields were richer and any new regulation of money-market funds might have been met with a hue and cry from middle-class savers. Today? Crickets.

MONEY stocks

WATCH: Insider Trading is More Widespread Than You Thought

According to a new study, nearly 25 percent of all public company deals involve some insider trading.

TIME insider trading

Hedge Fund Manager Gets 3 Year Sentence for Insider Trading

Michael Steinberg SAC
Michael Steinberg, former SAC Capital portfolio manager, leaves Federal Court after sentencing in New York City on May 16, 2014. Andrew Gombert—EPA

Michael Steinberg was sentenced to 3 1/2 years in prison for insider trading on Friday. His prosecution was part of a decade-long federal investigation into former hedge fund giant SAC Capital and its billionaire founder Steven A. Cohen

Michael Steinberg, a top lieutenant to billionaire hedge fund mogul Steven A. Cohen, was sentenced to 3 1/2 years in prison for insider trading on Friday after being found guilty last year of securities fraud and conspiracy charges.

Steinberg’s sentencing is the latest black mark on Cohen’s former hedge fund, SAC Capital, which last fall pleaded guilty to securities fraud and agreed to pay $1.8 billion in the largest insider trading fine in U.S. history.

“Michael Steinberg traded on information from company insiders at Dell and NVIDIA to reap nearly $2 million in illegal profits,” Manhattan U.S. Attorney Preet Bharara said in a statement emailed to TIME late Friday. “Today he has learned the steep cost of those transactions.”

Steinberg, 42, was found guilty last December of conspiracy to commit securities fraud and four counts of securities fraud for insider trading involving two tech stocks, Dell and NVIDIA, that reaped $1.8 million.

“For most people on the planet, $1.8 million of gain is a lifetime of accumulated wealth,” U.S. District Judge Richard Sullivan said before he sentenced Steinberg to prison, according to Bloomberg. “Maybe in a hedge fund it’s no big deal but it’s a lot of money to most people.”

Prosecutors had urged Judge Sullivan to sentence Steinberg to more than six years in prison.

Steinberg’s prosecution was part of a decade-long federal investigation into SAC Capital. Last year, SAC was charged with securities and wire fraud for a scheme in which the fund engaged in a pattern of “systematic insider trading” that allowed it to reap hundreds of millions of dollars in illegal profits.

In April, a federal judge in New York accepted SAC’s guilty plea and approved a landmark $1.8 billion settlement with the government, effectively concluding a decade-long criminal investigation. SAC agreed to shut down its investment advisory business, but was allowed to continue to do business under a new name as a so-called “family office” managing Cohen’s $9 billion fortune.

Federal authorities have been investigating SAC for a decade — rumors of insider trading have been swirling around the hedge fund for years — and have secured guilty pleas or convictions from eight of its former employees. Cohen, who remains under investigation by the FBI, has never been charged with a crime.

It appears unlikely that Cohen will ever be personally indicted for his role leading a firm that was “riddled with criminal conduct,” according to federal prosecutors. Cohen does face civil charges from the Securities and Exchange Commission alleging that he failed to supervise his employees, and could ultimately be banned from the securities industry for life.

Steinberg has been granted bail, pending an appeal, according to Reuters.

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