After realizing that disappointed informants – most notably Peter Scannell, the phone representative in the Putnam Investments case – are taking their knowledge to state authorities, the Securities and Exchange Commission is looking into the manner in which it deals with information received in the ongoing mutual fund scandal, Reuters reports.

But the SEC’s acknowledgement that it bungled its handling of Scannell comes a little late, as New York State Attorney General Eliot Spitzer continues to blast the nation’s top regulator. "Heads should roll at the SEC," Spitzer announced yesterday. "There is a whole division at the SEC that is supposed to be looking at mutual funds. Where have they been?"

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