Spitzer's Fee-New York's attorney general wants you to pay more for your mutual fund.

Wall St Journal ^ | 1-5-04

[SJackson]

While regulators at the Securities and Exchange Commission snoozed on the job, mutual fund companies were engaged in practices that improperly favored some investors over others. Mr. Spitzer should take a bow for bringing late trading and market timing to the SEC's attention. But his job henceforth is to pursue the wrongdoers and enforce the law, not use it as a lever to try and remake an industry.

[ClintonBeGone]

Sounds pretty self serving of the WSJ and it's reader base. I'm of the opinion if Alliance had a good case it wouldn't have settled for $350 Million.

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[Gigantor]

Care to comment on the question "What right does Elliot Spitzer have to tell a private business what it can and cannot charge?"

[17th Miss Regt]

Alliance may well have been guilty, but that misses the point of the article. Please see post # 4.

[bryanbig]

Spitzer has no right to tell them what they are forced to charge...
HOWEVER
he has every right to enforce the law. And a good minority of mutual fund companies have broken their fiduciary duty over the past 10 years. This is illegal.

So if they come to a settlement that includes lowering fees, that's not a bad thing. Alliance didn't have to settle, they could have paid back all the fees they "earned" while they were allowing the illegal activities to go on.

Most mutual fund investors are getting gouged and don't even know it. The average Joe looks at the "expense ratio" and thinks that's what they are paying. It's only the tip of the iceberg. You wanna be for the free market, you should be for changing the laws so these guys get paid for performance rather than building assets.

[ClintonBeGone]

Care to comment on the question "What right does Elliot Spitzer have to tell a private business what it can and cannot charge?"

Certainly. In fact, I'll give you the Attorney Generals own words:

"Simply stated, the desire for increased fees led managers and directors to abandon their duty to investors and to condone improper and illegal activity. Common sense demands that we at least inquire whether the desire for increased fees also resulted in fee agreements and charges that were improper."

I'm far from a populist, but there isn't an Attorney General in this United States that doesn't have the power to use his office to investigate abuses of power, breaches of ethics and scemes to defraud consumers.

[ClintonBeGone]

Spitzer has no right to tell them what they are forced to charge... HOWEVER he has every right to enforce the law. And a good minority of mutual fund companies have broken their fiduciary duty over the past 10 years. This is illegal.

The tone of the question you responded to sounds like it came from a headline reader who owns investments no more complicated than a passbook savings account.

[ClintonBeGone]

Aside from "clinics" for small investors, anyone care to guess where much of the fines/contributions went?

And where does the stupidity lie in this situation? With the AG or the mutal fund operators who were foolish enough to step into his web?

[Gigantor]

"Simply stated, the desire for increased fees led managers and directors to abandon their duty to investors and to condone improper and illegal activity. Common sense demands that we at least inquire whether the desire for increased fees also resulted in fee agreements and charges that were improper."

And this tells me how Spitzer can dictate the prices a private business charges how, exactly?

Tell me quickly, I'm about to buy a new Panasonic TV set and I want to ask Elliot Spitzer for the best price quote.

[ClintonBeGone]

If the latter had made a little public noise at where the fines were going, perhaps more of it could have gone: (a) to the investors who were gouged and (b) to investment clinics for students that go beyond balancing the checkbook and actually ENCOURAGE and teach investment strategy.

Yep, I totally agree.

[ClintonBeGone]

And this tells me how Spitzer can dictate the prices a private business charges how, exactly? Tell me quickly, I'm about to buy a new Panasonic TV set and I want to ask Elliot Spitzer for the best price quote.

Maybe you should let your legal guardian handle that transaction. You apparently are not comprehending the nexus between fees and illegal activity. I doubt you'll do much better at the appliance store.

[Gigantor]

"Maybe you should let your legal guardian handle that transaction. You apparently are not comprehending the nexus between fees and illegal activity. I doubt you'll do much better at the appliance store."

Strike two.

[ClintonBeGone]

LOL

[SJackson]

I'm far from a populist, but there isn't an Attorney General in this United States that doesn't have the power to use his office to investigate abuses of power, breaches of ethics and scemes to defraud consumers.

Of course not.

Illegality aside, the question of fees should be decided by the market. Don't like them, don't buy the fund. Commissions were regulated in the past, they were deregulated and the industry flourished.

[SierraWasp]

"You apparently are not comprehending the nexus between fees and illegal activity."

Ok, I'm a little dense! Just exactly and specifically what is the nexus? We don't tell drug dealers what they can or can't charge! We lock 'em up, take their illgotten gains and fine 'em for good measure.

Sorry, I'm not comprehending any "nexus" either!!!

[SJackson]

Aside from "clinics" for small investors, anyone care to guess where much of the fines/contributions went?

I haven't looked at this one, but I presume it's like the research settlement, to the states with a generous cut to New York for bringing the actions.

[SJackson]

You apparently are not comprehending the nexus between fees and illegal activity.

Fill me in. From what I know of these cases, there isn't any. In fact, much of the "illegal activity", market timing, isn't illegal.