Phil Edwards, Managing Director of funds research at Standard & Poor’s responses to questions being asked of Standard & Poor’s regarding the allegations of fraud in the fund industry put forth by New York State Attorney General Eliot Spitzer. Mr. Edwards remains available for media
interviews.
On New York State Attorney General Eliot Spitzer’s investigation in
general:
“Standard & Poor’s is extremely concerned about assertions of fraud in the
mutual fund industry, and is monitoring the situation closely. Any allegation
of fraud needs to be taken seriously and followed carefully.”
On whether or not the allegations outlined in Mr. Spitzer’s investigation
may be widespread throughout the fund industry:
“As the complete scope of the investigation is still yet unknown, it is
very important that investors, industry professionals, and the media do not
paint the entire mutual fund industry with one brush. The actions of a few
should not speak to the industry as a whole.”
On what investors should do if they own funds managed by Bank of America,
Janus Capital Group, Strong Capital Management, or Bank One:
“Standard & Poor’s suggests that investors monitor the situation closely.
We would not recommend that investors consider selling the funds run by these
fund companies until the Attorney General and the fund companies involved
release a more detailed analysis of the investigation. Some of the fund
companies have already stated that they plan to make full restitution to all
fund investors in the event that it is concluded that any misconduct occurred.
In the meantime, the lesson learned from this is that investors should look
beyond the performance of a fund before making any investment decision, and
pay close attention to items such as the style of a fund, quality and tenure
of its management team, the fees charged, and the other information contained
within a fund’s prospectus.
On whether or not Standard & Poor’s will continue to recommend the funds
of the companies outlined in the investigation:
“Until more details into the depth and breadth of the investigation are
put forth, Standard & Poor’s will not remove its recommendations on the funds
managed by any of the companies outlined in the investigation. It is still
too early to make a call of that magnitude. In addition, Standard & Poor’s
would not recommend that investors consider selling out of all of the
company’s funds, until it is determined how systematic the problem is within
the fund company under investigation.
About Standard & Poor’s Independent Funds Research:
* 65+ fund analysts globally — including London, Paris, Frankfurt, and
New York
* Mutual Fund Reports on over 15,000 domestic mutual funds
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firms use Standard & Poor’s fund research through its online service,
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