When mutual funds cheat

The widening investigation into trading practices at some of the nation’s biggest mutual fund companies has all the hallmarks of another big Wall Street scandal. Yet the allegations that four funds offered preferential — and sometimes illegal — treatment to a well-connected hedge fund have been met so far by a collective yawn on Main Street. Where is the outrage?

ON THE SURFACE, the probe of mutual fund practices by federal and state regulators has the potential to be as damaging to investor confidence as last year’s disclosures of fraud and misdeeds at Enron, Arthur Anderson, WorldCom and other firms. After all, mutual funds are the investment vehicle of choice for tens of millions of small investors who rely on the industry’s reputation for integrity — virtually untainted by scandal until now. About 50 million of the nation’s 119 million households own stocks through mutual funds, compared with about 25 million households that own individual stocks.
       But even though improper trading practices may have cost mutual fund shareholders billions of dollars, according to New York Attorney General Eliot Spitzer, many investors seem unaware of the investigation, much less concerned about it. A spot check of several mutual fund branch offices in northern New Jersey found little or no phone traffic asking about the probes, and only one affected company, Janus, has seen a significant decline in its stock price. While the investigations are growing, the scandal seems unlikely to trigger widespread outrage for several reasons, say experts in investor psychology.

http://www.msnbc.com/news/963826.asp?0cv=CB20

Where is the Independent Council?

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With POLL
Have the scandals over the past year affected the way you invest?
* 944 responses

No -- I still invest as I always have.
 37%

Yes -- I am much more careful to whom I trust my money.
 48%

Yes -- I only keep my money in my sock drawer.
 15%

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