Federal and state programs instituted to educate the public about investing wisely are fighting over money allotted to them in the aftermath of the stock research scandals that surfaced in 2003, the Wall Street Journal reports.

The landmark $1.4 billion settlement reached in April 2003 with Wall Street investment banks for misleading stock research put aside $30 million for investor-education efforts in the states and another $55 million for a federal program.

As the federal program, which was set up by the Securities and Exchange Commission about a year ago, has dwindled, the states are now trying to grab the fed's portion of the money. The feds say that the states have already received their part of the money, and that the states' programs have been incurring investment losses stemming from overly aggressive investment strategies.

The fed program's top executives plan to leave, and rather than resurrect the program, the SEC recently asked a judge overseeing the global settlement to approve a plan that would dissolve its current investor-education entity and allow a National Association of Securities Dealers foundation to take control of the federal education money.   

This move is being opposed by the Investor Protection Trust, a nonprofit group overseeing the states' investor-education efforts, which plans to file a third-party commentary in federal court suggesting there are other alternatives to the NASD foundation, including itself.

"It's not an issue of questioning the SEC's wisdom in this matter, just should there be some additional discussions of what the options are before turning over money to the NASD foundation," says Don Blandin, IPT's president and chief executive.

Even as the effectiveness of the investor-education programs remains ambiguous, a host of nonprofits and consulting firms is scrambling to take advantage of the large sums of money being poured into these programs.

One such entity is the IPT, which took in $2 million in 1993 for investor-education after Salomon Brothers agreed to pay $4 million to settle charges related to abuses in the U.S. Treasury auction market. Still, the group's own investments have seen losses in recent months. The organization recorded an $80,000 loss on its investments, which include mutual funds and bonds, during the first three months of 2005, according to public documents.

The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.

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