Mutual fund investors, take note. New York Attorney General Eliot Spitzer is before a Senate subcommittee today, explaining just how terribly you've been treated -- and he's just as likely to be referring to the SEC as to the scandalous managers who have taken profit out of your pocket.
Last week, Spitzer said "heads should roll" at the SEC because its mutual fund division -- apparently tipped off about market-timing trades at Putnam Investments -- was too slow to act. "If I had been the head of the bureau overseeing the mutual fund industry for the past year," he told the New York Post, "I would resign."
For its part, the SEC admitted it could have done better, but is upset at the comments. A likely candidate for the governor's office in Albany, many view Spitzer as a loose cannon more interested in building headlines than a unified enforcement effort. "This should not be a competitive situation between regulators," SEC chief William Donaldson said. "The spectacle of one regulatory agency criticizing another is not healthy."
Even as feuding between the good guys rages, progress is being made. Today, Putnam Investments CEO Lawrence Lasser was fired by parent company Marsh & McLennan (NYSE:MMC) because of his role in the trading scandal. Putnam funds have seen at least $4.3 billion pulled out by state pension plans since Lasser was implicated last week, according to Reuters.
His removal follows the weekend resignation of Strong Mutual Funds Chairman Richard Strong, who reportedly made more than half a million dollars through improper share trading. His troubles are far from over, however. Though no longer chairman, he remains the company's chief executive, and Spitzer has vowed to prosecute his case as well.
What other funds have mistreated investors? See Four Funds to Avoid.
