November 17, 2003

New CotC and Mutual Fund Scandal

There are some really good posts in this week's Carnival of the Capitalists hosted by Professor Bainbridge. Sadly, there's nothing from TAM this week. However, read this post by Chris Noble on the mutual fund scandal. He responds to some bad writing by a MSN Money columnist.

With [open ended] mutual funds, shares are created when the purchase is made and destroyed when the shares are sold. There is no direct harm to another investor. Indirect through higher fees and operating expenses, maybe. But not directly.

I've followed the story only casually because a local fund executive is in Elliot Spitzer's sights. Throughout all the reporting I've read, I never found out how investors were being harmed. Does "higher fees and operating expenses" justify the witchhunt by regulators and the press? Or am I missing something?

"Mutual Fund Misinformation"