During the past few weeks, a number of securities regulators have announced investigations of the trading practices of certain mutual fund providers. As the number of providers being investigated increases, it becomes more likely that a fund in which your plan invests will be named in such an action. The focus of a fiduciary’s duty to monitor plan investments remains that of procedural prudence, which typically involves analyzing a variety of factors before making any decision whether to retain or terminate a fund.
The Allegations.
The current allegations generally involve two types of improper practices. First, certain organizations that sponsor and manage mutual funds are accused of permitting favored shareholders to engage in market-timing transactions in shares of such funds in a way that appears to violate fund rules disclosed in the prospectus. Market-timing is the process whereby a fund shareholder profits from changes in the value of certain assets held by a fund on a given
