Federal Fund Fraud Hearing to Begin in MD

Four federal judges will hold the first hearing this week on nearly 100 private lawsuits against six mutual fund companies involving improper trades, The New York Times reports. The multi-jurisdictional hearing is taking place in Baltimore, as Maryland is a favored state of incorporation for mutual funds.

The judges’ first two concerns are setting a schedule and determining themes, or tracks, in the litigation against the six firms: Alliance, Bank of America, Bank One, Janus Capital, Putnam Investments and Strong Capital. The plaintiffs’ complaints center around how the fund companies allowed wealthy clients to market time and late trade their funds at the expense of ordinary investors.

"This is now going to be sort of Ground Zero for the federal securities litigation involving the mutual fund fraud that has been in the news," commented Andrew Levy, a trial attorney and adjunct professor at the University of Maryland School of Law.

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