What You Need To Know Mutual Fund Settlements

by Junior Boomer on October 4, 2010

If you have received paperwork regarding a class action mutual fund settlement, the first thing you need to understand is that the documentation is not a scam. The class action lawsuit stems from the 2003 mutual fund scandal were mutual funds were involved in market-timing and late trading practices that are illegal. In 2003, New York’s Attorney General Eliot Spitzer began an investigation after receiving a tip from a Wall Street working that late trading was becoming a problem.

Mutual Fund Settlements
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Late trading occurs when traders are permitted to purchase fund shares after the 4:00 pm EST set time for mutual fund prices. Market timing is an investment strategy where an investor tries to profit from short-term market cycles. Trades are done as market sectors heat up or cool down. Firms involved in the suit are alleged to have committed fraud when some clients were allowed to trade more frequently than was permitted by their fund documentation.

Mutual Fund Involvement

You’ll need to recall which, if any, of the mutual funds you had an involvement with as far back as October 1998. The following list of mutual funds are involved in the class action lawsuit:

  • Alger
  • AllianceBernstein
  • Allianz
  • Bank of America/Nations
  • Columbia
  • Federated
  • Deutschebank/Scudder
  • Invesco
  • Janus
  • MFS
  • One Group/Bank One
  • Pilgrim Baxter (PBHG)
  • Putnam
  • RS
  • Schwab/Excelsior
  • Strong

How to Claim Your Mutual Fund Settlement Monies

If you have an involvement in the class action lawsuit over mutual funds, you will need to submit a claim. Here is what you need to know about claim submittal:

  • Settlement Period – the time for each fund varies but most go back to October 1, 1998 to September 30, 2003.
  • Deadline – claimants have until December 8, 2010 to submit a claim.
  • Claim Process – most claimants will receive a notice via mail. The notice will direct you to a website where you will file your claim using a dedicated number.

Individuals who have a claim but have not received a claim notice in the mail can still submit a form through the website. Claimants will need to identify how many shares of each mutual fund were held at the end of each of the years included in the lawsuit.

You will need to do your homework regarding the dates of your involvement with any of the included mutual funds. It may be advisable to create a spreadsheet that lists dates and funds in order to account for all potential claims.

A court-approved website will direct you to more specific court-approved sites that explain the proposed settlements reached in the above-listed mutual fund families in the Mutual Funds Investment Litigation.

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