Individual mutual fund shareholders are likely to be left out in the cold when it comes to compensation for losses they suffered on stocks analysts pumped during the raging bull market, the Associated Press reports.
In the recent $1.4 billion settlement package between regulators and 10 brokerage firms, who the government claims issued misleading stock research and ratings, $387.5 million goes into an investor restitution fund. But it remains unclear how and to whom the fund will be distributed, and which stocks investors will be compensated. Claims by investors that believe they were misled is expected to greatly surpass the allotted figure.
Many fund companies havent decided if they will apply for the restitution fund. And a major dispute is whether a fund company will be allowed the discretion to disburse compensation money as it sees fit once it receives it settlement on behalf of its shareholders.
The Vanguard Group said it would add the money back to the assets of the appropriate mutual funds.
Whether any mutual fund investors can recoup money will ultimately depends on the number of individual investors that seek repayment, said Barry Barbash, a former Securities and Exchange Commission lawyer who now works for fund companies in private practice.
The staff of Mutual Fund Market News ("MFMN") 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 MFMN, and have not prepared, sponsored, endorsed, or approved these summaries.