Ann L. Combs, assistant secretary of the U.S. Labor Department's Employee Benefits Security Administration, has a message for corporate retirement plan sponsors who learn that mutual funds their plan offers are under investigation: Don't panic. "People shouldn't panic and shouldn't pull out, especially early on," says Combs, adding that investigations don't always turn up wrongdoing. "You could find yourself pulling out of a fund and going into another fund only to find that they then become the subject of an investigation."

And that possibility is a real one. While abusive trading practices at mutual funds only began to draw fire from regulators in September, by mid-March, Chicago-based fund research firm Morningstar Inc. already had listed at least 20 fund groups that had been formally charged or were under investigation.

Meeting Erisa Obligations