Citing New York Attorney General Eliot Spitzers charges against Canary Capital Partners and his related investigation into Janus, Bank of Americas Nations Funds, Bank One and Strong, Morningstar has suspended its recommendation on the four families funds indefinitely. Furthermore, Morningstar is urging investors to consider selling their shares in these funds. However, Morningstar said the funds will still qualify for its top "star" ratings, should they deliver performance that merits them.
"We think that the Janus fund family does not deserve investors confidence," Morningstar analyst Brian Portnoy, writes in " Janus Third Strike," on the Morningstar Web site. "Spitzer has indicated that he is at the beginning of his investigation of the fund industry, but in our opinion, the evidence he has presented already is sufficiently damning for those implicated in his complaint." Portnoy says he is disgusted with Janus decision to allow hedge fund Canary to market time several of its funds all to receive fees and boost sagging assets, thereby putting the profit of the firm ahead of investors best interests. Portnoy says he is further galled by the fact that the firms research director stated publicly that when the market began sink, Janus didnt have any other good ideas outside of the narrow list of technology stocks it had heavily invested in. Further, he notes, Janus was the biggest shareholder of Enron.