Mutual Funds Under Fire

The Wall Street Journal has an article (subscription required) in today’s edition on the record numbers of mutual-fund investors bringing arbitrations against their brokers. The article discusses the recent mutual fund trading scandal but concludes: “Individual investors aren’t likely to bring arbitration claims related to the explosive allegations involving rapid-fire trading from New York Attorney General Eliot Spitzer. That’s because the damage to any one investor is relatively small, and it’s hard to blame your broker for fund-company practices. Instead, these allegations are more likely to provide fodder for class-action lawsuits.” (The WSJ should catch up with current events, the class action suits are already here and more are being brought every day.) The article goes on, however, to describe some of the other mutual-fund practices being investigated by the regulators that may lead to even more individual, and perhaps class action, claims.

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