Chicago fund tracker Morningstar is recommending that investors steer clear of Federated Investors and Fremont Funds, two firms that have yet to settle with regulators and that have been relatively tightlipped about wrongdoing and remedies.

"Federated has a lot to answer for, but it seems it would prefer not to," Russ Kinnel, Morningstar’s director of fund analysis, writes in a recent "Fund Spy" column. Kinnel also said "we wouldn’t send [either firm] a dime until they’ve settled with regulators and made clear how they’ve rebuilt their compliance systems and righted their listing corporate cultures."

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.