Industry-Wide Settlement Unlikely In US Mutual Fund Probe

by Leroy Baker, for LawAndTax-News.com, New York

13 November 2003

A report published on Tuesday by Bloomberg News has suggested that a global settlement of the kind recently reached by New York Attorney General, Eliot Spitzer with Wall Street securities firms over biased stock research, is unlikely to be reached with mutual fund firms currently under investigation for market abuses.

In an interview, Massachusetts Secretary of the Commonwealth, William Galvin, who has so far played a major role in the probe, explained that:

"With the securities firms, the behavior and the situations were similar. You don't have that here."

Speaking before a House subcommittee in Washington last week, he had announced that the US authorities intend to take each case to trial, adding: "If there are settlements, it will be with admissions of wrongdoing."

He elaborated on this point in Monday's Bloomberg interview, suggesting that:

"One of the pitfalls of a so-called global settlement is it can allow the industry to not address its real shortcomings."

Former SEC enforcement attorney, Ron Geffner supported this viewpoint, and observed that even if the desire were present on both sides of the investigation for such a settlement, it would be logistically very difficult to achieve.

"There are materially different facts and circumstances in each case," he explained, continuing: "It's going to be much harder to get everyone to agree to any kind of global settlement."

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