In what should have been a three-month red carpet rollout to an 80th birthday party, the mutual fund industry is not even thinking of a gala. Instead, it is pondering mistakes of the recent past and reforms for the near future.

Even the first fund company, MFS, and other highly respected players like Putnam, have not avoided troubling practices like market timing.

But it might be helpful to look at the scandal not just by the rules that have been broken - namely market timing and late trading - but, rather, by taking a hard look at the powerful people who betrayed middle-class investors in favor of satisfying larger and wealthier clients, like hedge funds.

"I was outraged," Charles R. Schwab said to The New York Times. "I just couldn't quite believe that a fund company would be in cahoots with hedge funds to allow them to use portfolio information to game their funds."

But this March, when the 80th anniversary of the first mutual fund rolls up, all the talk will be of alternative definitions of fiduciary and the ways some in the industry ruined the party.

Copyright 2004 Thomson Media Inc. All Rights Reserved.

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