Three mutual funds have drawn the Securities and Exchange Commission’s ire for alleged violations resembling the accounting sins committed by Bridgeway Capital Management, Bloomberg News reports.

The SEC is now targeting The Putnam Research Fund, Gartmore U.S. Growth Leaders fund and the WWW Internet Fund for potentially erring in performance-based fee calculations. The fees in question rise and fall in proportion to a fund’s ability to beat its benchmark, such as the Standard & Poor’s 500 Index.

Bridgeway’s recent $5.1 million settlement wit regulators opened the door for other firms that use performance-based fees to face scrutiny for questionable accounting practices, a new wrinkle to the mutual fund scandals, which have largely focused on improper trading.

The Putnam Research Fund revealed in a February regulatory filing that investigations had raised questions about its performance-based fee calculations. SEC regulators told Gartmore that its practice for determining performance-based fees could be out of compliance. Also, the WWW Internet Fund’s manager said the SEC believes shareholders may be entitled to a $500,000 rebate due to incorrect performance fee calculations.

Roughly 260 funds, including Fidelity Investments’ flagship Magellan fund, reap the benefits of performance-based fees in up markets. Fidelity has not been contacted in connection with the SEC’s recent spate of inquiries into performance-based fees, a spokesman said.

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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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