Fund scandal has put me in the market for outrage
By Beth Teitell
Wednesday, November 19, 2003

You know what I hate? When you're really worked up about something but you're not sure what it is exactly that you're so worked up about.
     The other night, I was reading an MSNBC.com story about the growing mutual fund scandal, wondering if I should put my sofa against the wall and move the chairs to the bay window, when I came to the following sidebar: ``Are you outraged?'' the text asked.
     ``You bet I am,'' I yelled at the screen, quickly clicking on a hyperlink to an explanation of market timing and late trading in hopes of understanding what it was that had me so angry.
     Even after a few read-throughs - still pondering the furniture feng shui - I'm still not totally sure what Putnam and Morgan Stanley did wrong. But I'll tell you one thing, as one of the millions of Americans with retirement money in a mutual fund: Enough is enough.
     (At least, I think I'm one of the millions of Americans with retirement money in a mutual fund. To be honest, I'm not really sure what kind of financial instruments I'm in, or, for that matter, what a financial instrument is, or even whether one can properly be said to be ``in'' a financial instrument.)
     I know the mutual fund scandals are bad for investors - both the chairman of the Federal Reserve and the secretary of the Treasury are calling for swift punishment for anyone convicted of wrongdoing - but my main concern is not so much economics as it is, well, boredom.
     I'm getting sick of these fiscal scandals that force people who chose not to go to business school for a reason to have to learn arcane financial trivia.
     Last year, there were those Generally Accepted Accounting Principles we all had to master. Now we're supposed to memorize the definitions of ``share classes,'' ``break points'' and, of course, ``late trading'' and ``market timing.''
     Being realistic, I decided to study up on only the last two. And in hopes of actually remembering what I learned, I tried to equate them with financial dealings in my own life.
     So now when I think of market timing, which refers to rapid short-term trading done to exploit inefficiencies in the pricing of share funds, I think about the Filene's Basement timing practiced by my friend L., which involves hiding a garment poised to drop in price at the close of business one day, then retrieving it the moment the store opens the next day. Technically not illegal, but not totally kosher, either.
     As for late trading, which occurs when investors are allowed to purchase mutual fund shares after the 4 p.m. deadline but at the pre-4 p.m. price, I realized that's like buying a Fendi bag at full retail, but then getting a tip from a saleswoman that it's about to go on sale two days later, and returning with the receipt for a refund. Or maybe that's more like insider trading.
     Either way, even if I do figure out what the companies did, getting myself into a lather over mutual fund abuses will never be as much fun as getting outraged about the $50 hamburger Daniel Boulud sold at his DB Bistro Moderne in Manhattan last year.
     Now that's the kind of scandal we can all sink our teeth into.