Reverse Spin – Janus stunner: Star manager to leave

It must be nice to be able to retire before your first Botox treatment.

Helen Young Hayes, the well-known fund manager and chief investment officer at Janus Capital Management LLC, shocked the mutual fund world Thursday when she said she planned to retire.

Ms. Hayes, lead manager of the $11 billion Janus Worldwide Fund and $2.6 billion Janus Overseas Fund, will step down from her daily responsibilities June 16 but will remain with the Denver-based company through the end of the year.

Laurence Chang, co-portfolio manager of Janus Worldwide since 1999, will become lead manager, while Brent Lynn, who has helped Ms. Hayes in managing Janus Overseas, will take over her responsibilities on that fund.

Janus is looking for a new chief investment officer.

“I think this is the biggest news to come out of Janus in years,” said Brian Portnoy, a senior analyst at Morningstar Inc. in Chicago.

Nothing to prove

* He is clearly the man for the job. Just don’t ask him to prove he is man enough.

The Securities and Exchange Commission on Tuesday named William McDonough, president of the Federal Reserve Bank of New York, to head the board charged with policing auditors that verify the results of public companies.

Mr. McDonough, who expects to assume his new post as head of the Public Company Accounting Oversight Board by the end of May, says the board needs someone who is willing to be tough when necessary. “I am not a believer in being tough in order to demonstrate my manhood or to prove anything to anybody,” he said.

Another tough guy, New York Attorney General Eliot L. Spitzer, praised the choice of Mr. McDonough on CNBC television. He said Mr. McDonough was “a man of absolute integrity who understands the marketplace. He is a superb choice, and I think that goes a long way to finally getting that organization going.”

Perking up

* The news on the economic front isn’t all that bad.

The consumer price index, the most popular gauge of U.S. inflation, rose 0.3% in March, the Department of Labor said last Wednesday. Not counting food and energy prices, the CPI was flat, the most subdued reading on so-called core inflation since February 1999.

“This is more good news on the inflation front,” Richard DeKaser, chief economist at National City Corp. in Cleveland, reportedly said.

Economists had expected the CPI to rise 0.4% and the core index 0.2%. Meanwhile, a separate government report showed that housing starts jumped 8.3% last month, the largest gain since September.

You’ve got a lawsuit

* That is some hat trick going on at New York’s AOL Time Warner Inc.

Two institutional shareholders last Monday filed suit against AOL’s top executives, including chairman Steve Case and vice chairman Ted Turner, for allegedly using “tricks, contrivances and bogus transactions” to boost the firm’s share price.

The suit, filed by the University of California and New York-based Amalgamated Bank’s LongView Collective Investment Fund, claims that AOL’s earnings from 2000 to 2001 were overstated by almost $1 billion.

It also alleges AOL overstated the number of subscribers to its Internet service and that it inflated its e-commerce and ad revenue to secure its acquisition of Time Warner.

The suit says AOL and Time Warner executives took advantage of the companies’ January 2001 merger to cash in stock options on an accelerated basis. The merger, they said, triggered early vesting of 35 million stock option shares valued at $1.7 billion for the top five AOL executives alone.

Closing Quote

“It is suddenly OK to turn your brain off?”

— Domenick Pugliese, senior vice president and assistant general counsel at Alliance Capital Management LP, on the idea of funds turning to third-pary providers to tell them how to vote proxies.

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