CFO.com reports on plan sponsor reaction to recent mutual fund investigations:: “Subject to Failure: Recent scandals in the mutual-fund industry leave employers questioning the security of their plans.” As to the concern over ERISA fiduciary liability, the article notes:
If the practices being investigated are found to be widespread, plan participants may be being robbed of billions of dollars in retirement savings. . . Those costs, along with the potential for missed profits, are also raising fiduciary concerns. It seems unlikely that plan sponsors can be held liable for improper activities in mutual funds that have occurred up until now. But Mercer Bullard, a professor of securities law at the University of Mississippi School of Law, notes that after the Nations Funds revelations, companies are “on notice” that they can be held liable from now on.”
The article gives an overview of how plan sponsors of 401(k) plans are reacting to all of the mutual fund investigations. One plan sponsor notes that its plan fiduciaries are now reviewing the plan’s funds regularly and asking such questions as “[w]hat kind of controls does the fund have on [market timing]? What brokers does the fund use? and what kind of surveillance is in place to detect frequent trading?”
Then, Jim Juback writes this very interesting article at MSN Money.com: “3 more mutual fund scandals in the making: Reader e-mails tell me there’s still more rot in the fund industry that’s about to be exposed. Here’s what could be next — and what might happen to the industry as a result.”
Forbes.com is reporting that some are criticizing the SEC for its proposals today: “SEC mutual fund proposals criticized as not enough.”
The New York Times is reporting: “More Fallout in the Mutual Fund Industry.”
The Wall Street Journal has this article: “Market Timing Takes Toll On Money-Market Funds.”
“What do Marxists, high school students, frequent flyers and mutual fund investors have in common? Answer: They all want a world without classes.”: The Street.com reports in an article entitled “Mutual Fund Class Warfare.” The article points readers to the SEC’s Mutual Fund Cost Calculator which was mentioned here earlier this week.
Also, for those seeking information about all that has gone on in the investigations in the last couple of months, this article at Forbes.com will tell you: “CHRONOLOGY-Key events in mutual fund trading probe.”
More charges being brought, more executives stepping down, and more class action lawsuits being filed. You can view some of the actual cookie-cutter complaints being filed here and here.
In spite of all of this, the Globe and Mail is reporting: “Mutual fund sales climb.”