Regulators need more power to break scandal mutual funds

The scandal that has enveloped some of the largest countries in the mutual fund houses and has misled investors billions of dollars could have been detected earlier if state securities regulators has not been stripped of powers to oversee funds, state regulators and experts contend.A bill championed in 1996 by industry mutual funds of the powerful lobbying group blocked states to conduct regular reviews of mutual funds prospectus of May and have helped create an atmosphere that allowed s’ develop problems discovered, they said.

Accordingly, the industry has been shaken by a scandal of the enlargement that has shaken investor confidence. A number of companies of mutual funds, including Putnam Investments, Strong Capital Management Inc. and Pilgrim Baxter & Associates Ltd have been under pressure. The three companies have ousted their leaders some of whom were engaged in a trade. Huge fines were also imposed on mutual fund companies and there is a threat of criminal charges against employees and executives. An officer of Fred Alger Management Inc. has already received prison sentences.

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