The effects of New York Attorney General Eliot Spitzer’s probe into mutual fund late trading and market timing are beginning to reach far and wide. The U.S. attorney for the Justice Department in Manhattan, James Comey, is joining the case, The Wall Street Journal reports. With Comey on board, the stakes become higher because the penalties now carry the threat of possible federal prosecution. The news follows the Securities and Exchange Commission’s announcement Friday that it was joining forces with Spitzer.

Meanwhile, a flurry lawsuits against the four companies named in Spitzer’s case are beginning to be filed. They include two separate class-action suits by the New York law firm of Bernstein Liebhard & Lifshitz against Strong and Janus, a suit by Los Angeles law firm Weiss & Yourman against Bank of America and a suit by New York law firm Wolf Popper against the three aforementioned firms and Bank One, the fourth firm named in Spitzer’s lawsuit. Janus and Bank of America have both announced that they are prepared to reimburse shareholders.

Meanwhile, the financial planning community has become wary of the firms named in the suit, sister publication Financial Planning reports. Most financial planners said they did not think the practice is widespread, but they would be doing extensive due diligence before recommending funds in the four families to investors.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.