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Mutual funds under fire: a chrononogy of developments since January 1, 2003

Thomas R. Smith Jr (Partner at Sidley Austin Brown & Wood LLP, New York, NY, USA. (tsmith@sidley.com))

Journal of Investment Compliance

ISSN: 1528-5812

Article publication date: 1 January 2006

Abstract

Purpose

The purpose of this paper is to provide a comprehensive background on the recent legislative, regulatory, and prosecutorial scrutiny of mutual funds and underlying issues such as the level and transparency of fees and costs, distribution and sales practices, and fund governance.

Design/methodology/approach

Provides a detailed chronology of events since January 2003 concerning mutual fund scandals such as trading abuses and questionable sales practices and related issues such as revenue sharing, directed brokerage, soft dollars, market timing, late trading, and selective disclosure. The chronology in this issue of JOIC will be followed an article in the next issue that describes reform initiatives that have taken place in response to the scandals.

Findings

Despite criticism and scrutiny of equity mutual funds following poor performance in 2001 and 2002, meaningful efforts to achieve reform began to lose momentum in mid‐2003. Then concern with mutual fund abuses was reignited in September 2003 when New York Attorney General Eliot Spitzer announced a settlement with Canary Capital that involved market timing, late trading, and selective disclosure. Since then there have been numerous disclosures of fund trading abuses and questionable trading practices, and the resulting uproar has triggered significant efforts to reform the manner in which funds and their service providers conduct business.

Originality/value

This comprehensive chronology provides an essential reference by bringing together all the events and underlying issues related to mutual fund scandals, abuses, regulation, compliance, and reform efforts since January 1, 2003.

Keywords

Citation

Smith, T.R. (2006), "Mutual funds under fire: a chrononogy of developments since January 1, 2003", Journal of Investment Compliance, Vol. 7 No. 1, pp. 4-33. https://doi.org/10.1108/15285810610690224

Publisher

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Emerald Group Publishing Limited

Copyright © 2006, Emerald Group Publishing Limited