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."
"We think Spitzers allegations of trading misdeeds at Bank of America, Janus, Strong and Bank One should prompt investors to consider selling their stakes in funds run by those firms," Portnoy concludes.