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The Feds Are After A Fund In Your Dc Plan. Are You Next?

Experts advise plan sponsors to protect themselves from liability in the mutual fund scandal by doing mini-investigations into fund clean-up efforts

By Staff Writer | Updated on April 01, 2004

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.

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