It was only last week that Janus Capital Group
The Denver-based mutual fund manager immediately named Janus Chairman Steve Scheid, a former Charles Schwab
It just doesn't seem right that investors have to foot the bill for Whiston's golden parachute. After all, while head of retail sales, he ordered a study of market timing, an unethical practice whereby larger clients were allowed to divert profit from long-term investors by trading in and out of funds frequently. Janus permitted market timing for certain large clients and, as a result, was implicated in the still-unresolved scandal. More than a dozen fund firms are involved, including Alliance Capital Management
For his part, Whiston has issued a statement saying he has always been a vigorous opponent of market timing. Maybe so, but published reports suggest Janus allowed market timing during at least the first six months of Whiston's watch -- from January to June of last year.
The scandal has stung Janus badly, and may still be stinging it. For example, assets under management continue to fall. The firm attributes at least some of the withdrawals to scheduled pruning by institutional investors. But being one of the first firms named when the fund scandal broke last September can't be helping, nor can having a CEO who failed to immediately halt the practices that got Janus into trouble.
That's why, even with the charge to earnings, the payoff for Whiston's resignation could be worth it. Janus needs a settlement with New York Attorney General Eliot Spitzer and the Securities and Exchange Commission to put the scandal behind it and attract new investors. Whiston's departure probably gets Janus closer to that goal.
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