Even with New York Attorney General Eliot Spitzer breathing down their necks on Sept. 3, 2003, leading mutual fund industry executives were assuring Money Management Executive that Canary Capital's market timing and late trading was merely a case of a few bad apples.

Who could ever have imagined the pervasiveness of this fraud? Who could ever have predicted the magnitude of the regulatory cases it would set off?

Today we stand, stunned, two years, $2.4 billion in fines and scores of federal cases later. With the United States Attorney General, the Justice Department and even the FBI now joining forces with the NASD and state regulators, the fund trading and sales scandals appear to be gaining, not losing steam, with no end to fresh cases, lawsuits, additional penalties and even jail time, in sight.

In this week's issue, marking the second-year anniversary of Fundgate in a front-page interview with Vanguard's indomitable Jack Bogle, we explore whether or not the mutual fund trading scandal will be remembered for posterity. Reform is inevitable, Bogle argues. But whether the scandal, which was dropped like a lead balloon by the national media when the news on 401(k) giant Putnam Investments hit the headlines, will even be a footnote in the U.S. financial history books, is the bigger question. We believe that, sadly, the fund scandal is already being forgotten by an investing public that isn't even aware that it began and continues in the first place.

And on an endnote to our devoted readers, we will be on a publishing hiatus the next two weeks, returning in print on Sept. 12. See you after Labor Day.

(c) 2005 Money Management Executive and SourceMedia, Inc. All Rights Reserved.

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