At the height of the buyout boom in 2007, private equity firms amassed expansive portfolios. Some of the drivers of the trend included: a growing economy and easy debt markets.

Of course, dealmaking has ground to a halt over the past couple years. However, private equity firms still need to find ways to get liquidity from their portfolios, so as to produce returns for limited partners.

How? Well, the IPO market will be crucial.

So, to this end, Fidelity Investments and Kohlberg Kravis Roberts & Co. (KKR) have agreed to form a venture to distribute IPOs to retail investors. Keep in mind that such offerings typically go to institutions and wealthy individuals. But private equity firms will need to expand their reach.

Now it looks like the media has a new Madoff angle to chew on. He made up the account statements that he sent to his victims. And investigators can find no evidence that he conducted any trades. For example, one Madoff victim's November 2008 account statement showed all sorts of trades -- including the buying and selling of shares in Fidelity's Spartan US Treasury Money Market Fund. But Fidelity has no record that Madoff's firm dealt with the Fidelity unit the works with investment advisers like Madoff.

If Madoff was not making up account statements he could not have pulled off his fraud. Of course the same thing can be said for Satyam Computer Services (NYSE: SAY) and Enron. As I have posted, when you allow a company or an investment manager to write their own report card, you are just asking for trouble. Simply banning that practice and replacing it with a 100% independent group of financial statement preparers would save society uncounted misery.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and is the author of You Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing. He owns Fidelity's Spartan US Treasury Money Market Fund shares and has no financial interest in the other securities mentioned.

After the stock market meltdown of 2008, Wall Street brokerages aren't anyone's favorites in 2009.

But some customers said they're still happy with their online broker.

A December ChangeWave survey of 3,051 consumers found that despite the extremely difficult financial market, two online brokerages still capture high customer satisfaction ratings -- Charles Schwab (NASDAQ: SCHW) and archrival, Scottrade.

During these times of crushing financial news, collapsing stock markets combined with tremendous volatility, government ineptitude (what else is new), doubt, pessimism, and yes -- fear --- we all need to hear the reassuring words of one of our most successful investment sages.

'My pal Warren' has been filling the media with market supporting bits of wisdom and backing it up by making strategic investments through Berkshire Hathaway (NYSE: BRK.A) and more investments utilizing his personal fortune.

Yesterday I received the following in an email quoting Peter Lynch, who managed to gain an average of 29.7% per year for 13 straight years while he was running Fidelity Magellan fund. Once someone asked him how he knows what stage the market is at, he replied:

• "If I go to a party, and introduce myself as a mutual fund manager to strangers, and they walk away from me and talk to other people instead, I know the market is near the bottom. If they sit down and ask me what stocks they should buy, the market is at normal levels. If they sit down and TELL ME what stocks to buy, the market is near the top."

DealBook reports that Fidelity Investments has agreed to buy back $300 million worth of auction-rate securities (ARS). This settlement is a first in the sense that the previous redeemers were ARS issuers. Fidelity is considered to be "downstream" from the issuers. And its decision to settle puts pressure on other downstream participants such as Oppenheimer and Raymond James.

Exactly what has Fidelity agreed to do? "According to the terms of the deal, the first struck with a 'downstream' seller of these securities, Fidelity will not pay a fine. The firm will buy back auction-rate securities from individuals, charities and institutional investors alike, making no distinction among investor classes, as previous settlements with other firms have," DealBook writes.

Of the $330 billion in ARS that were issued, only 10% have been redeemed so far -- "the big banks have repurchased more than $35 billion of the securities and paid more than $360 million in fines," according to DealBook. I am impressed that regulators are continuing to push hard to get ARS issuers to take care of these investors given all the distraction from the weekly collapse of one major financial institution after another.

This is the part of a new series of columns called "The Naked Truth," by retirement expert Dan Solin. Please bring him your questions, in the comments box, and he will answer as many as he can.

Ralph Cioffi and Matthew Tannin were indicted on June 18, 2008. They are accused of a litany of fraudulent activities in connection with the demise of two hedge funds they managed for Bear Stearns.

Cioffi and Tannin are entitled to the presumption of innocence. The obligatory "perp walk," staged for the benefit of the press, is offensive to traditional notions of justice. Not only does it demean and humiliate them, it taints the jury pool and intrudes upon their right to a fair trial.

Nevertheless, the indictment offers an insight into conduct that would otherwise be inexplicable.

Here are two highly educated, sophisticated, fund managers who achieved the American dream -- and then some. Why would they risk it all by, as alleged, misrepresenting the risk of these funds, and their personal stake in them?

This post is part of our Battle of the Brands feature. Let us know which brand you prefer, and check out other Battle of the Brands posts.

To some degree, a face-off between Vanguard and Fidelity is really a face-off between John Bogle, Vanguard's founder, and Peter Lynch, Fidelity's star fund manager. While Bogle was a pioneer in no-load and low-cost investing in index funds, Lynch was a proponent of investing in "what you know," or getting investing ideas from your day-to-day life. BloggingStocks covered this Bogle vs. Lynch match up back in September, and readers gave the financial edge to Lynch.

Privately held Fidelity Investments is made up by two independent but closely cooperating companies: Boston-based Fidelity Management and Research LLC serves the North American market, and Fidelity International Limited (FIL), spun off in 1969, provides investment products and services to clients in the rest of the world. Fidelity reported revenue of $12.87 billion in 2006, by offering a large family of mutual funds, as well as providing discount brokerage services, retirement services, estate planning, wealth management, securities execution and clearance, life insurance, and a number of other financial services. The founding Johnson family still controls Fidelity, but Peter Lynch and some other fund managers also hold stakes in the company.

This post is one of several on business heirs apparent. Let us know in the comments whether you think Abigail Johnson should take up the reigns of Fidelity, and be sure to check out the other heir apparent posts.

I covered the mutual fund business for about six years in the 1990s, when Fidelity Investments was all the rage. It had the most star managers, the best performing funds and by far the most assets. It had the awe-inspiring Fidelity Magellan! And that was nothing to sneer at back then.

So it was with great interest when I learned that Abigail Johnson, the daughter of CEO 'Ned' Johnson (himself an heir to Fidelity), and a woman near my age (she's 46), was being primed to take over the company. I have been cheering for her ever since. (Even as I wonder if the only way a woman can get to the top of a major financial services firm is by having her father run the place).

Google
Weiner likes Google Inc. (NASDAQ: GOOG). Weiner says of the search giant, "I don't think there's [strong] threats to their paid search advertising model." Interestingly, Weiner says that Google's biggest threat is not being a one-product pony, as many analysts and pundits criticize the company. Rather, Weiner is nervous about the expansionist drives of Google management into businesses that may not be nearly as attractive as paid search.

How vulnerable is your mutual fund to the ongoing mortgage meltdown? In this series, BloggingStocks contributor Lita Epstein, author of more than 20 books including Trading for Dummies and The Complete Idiot's Guide to Improving Your Credit Score, digs into mutual funds' holdings looking for securities with exposure to the currently shaky credit markets.

The first inkling I got that Fidelity might be tied to the SIV bailout was a story last week in The Wall Street Journal that indicated Fidelity's Prime Money Market Portfolio owned $402 million medium-term notes in Gordian's Sigma Finance Inc. as of the end of August [subscription required]. Taking a closer look at Fidelity Funds, I found two broad market bond funds with significant exposure to the mortgage-backed and asset-backed credit categories now showing signs of trouble.

As of 9/30/2007 Fidelity Ultra Short Bond Fund holds 42.4% of its assets in asset-backed securities, 17.5% in collateralized mortgage obligations and 15.2% in commercial mortgage-backed securities. That's 75.1% of its assets in securities tied to the credit markets that are now showing signs of trouble. While I'm not saying that 75% of this fund's assets are in trouble, what I am asking is, do you really want that much exposure to these markets in this volatile time?

As of 9/30/2007 Fidelity Short-Term Bond Fund holds 23.1% of its assets in asset-backed securities, 13.5% in collateralized mortgage obligations, and 11.6% in commercial mortgage-backed securities. That's almost half of its assets in the most volatile parts of the credit markets. If you do hold these funds, you need to decide if you want this level of exposure to these risky credit markets right now.

In reviewing bond funds this morning, these two Fidelity bond funds were less-diversified than many of its peers. While their yields may be high, you must decide whether the risk is worth it.

Lita Epstein is the author of more than 20 books including the "Pocket Idiot's Guide to Investing in Mutual Funds."

Nearing retirement and wondering how you can possibly manage your retirement portfolio yourself? I'm talking about the funds you'll be rolling out of your 401K, 403B or other employer-based retirement savings program. Many people are asking that question as they look at those large chunks of money and want to be sure they don't outlive their money during retirement.

Fidelity and Vanguard want to make that easier and cheaper with an alternative to annuities. Fidelity calls them Income Replacement Funds and Vanguard calls them Managed Payout Funds. Eleven Fidelity funds were launched last week and Vanguard plans to make its version of three funds available by early 2008.

How do these differ from annuities? Annuities are a type of insurance with a guaranteed payout based on a contract. They can be structured with a guaranteed payment for the rest of your life (no matter how long that is) or can be structured with a set payout over a set number of years. The big disadvantages of annuities is that you lose all control of the money inside the annuity and you have to pay significant fees to the insurance company managing it.

You probably think mutual funds are the least likely activist investors. While that was true in the past, the tides appear to be changing. T. Rowe Price just did something it's only done once before in its 70-year history - filed as an activist investor in order to fight the management buyout of Laureate Education, according to the Wall Street Journal.

T. Rowe Price mutual fund manager, Brian Berghuis, ran the numbers and determined that the private deal valued at $3.8 billion for this operator of universities could be valued about 80% higher. Why did he care? T. Rowe Price mutual funds shareholders could be losing as much as $210 million according the the Journal.

Management buyouts tend to work differently than the more traditional outsider takeovers. Managers want to keep the price as low as possible in these deals, while they look for the highest price possible for an outsider takeover.

Fidelity Investments took a similar stance against a deal for a private-equity buyout of OSI Restaurant Partners earlier this year. OSI manages the Outback Steakhouse chain. Fidelity's stance worked and the offer had to be increased before shareholders would approve it.

It's about time that mutual funds take activist stands to protect their shareholders. Mutual fund assets totaled $11.496 trillion in August, according to the Investment Company Institute. As managers of their investors' money, mutual funds have an obligation to make sure people who hold mutual funds get the best bang for their buck. There's power in numbers and if the mutual fund companies became more active in protecting the rights of their shareholders, both stocks and mutual funds shareholders would benefit.

Lita Epstein is the author of more than 20 books including the "Pocket idiot's Guide to Investing in Mutual Funds."