For wronged mutual fund investors, there may be no better remedy for their misbehaving fund companies than to settle with New York State Attorney General Eliot Spitzer.

Dozens of mutual fund companies have stepped forward and issued mea culpas since Spitzer initiated his assault on the industry last summer. But the majority of the companies have yet to provide even a dime of restitution to their shareholders from the settlements reached with

Securities and Exchange Commission

. The only money received by shareholders thus far has come from the fee reductions that three of the companies agreed to in separate settlements with Spitzer.

Nevertheless, with over $1.8 billion in settlements announced thus far from just five companies -- already more than the Wall Street Research settlement of $1.4 billion -- it's easy to understand why investors are tired of seeing headlines announcing huge deals like March's record $675 million

Bank of America

(BAC) - Get Report


FleetBoston Financial

( FBF) agreement, instead of seeing personal checks from their fund companies.

Alliance Capital

(AC) - Get Report



, a subsidiary of

Sun Life Financial

(SLF) - Get Report

, and the combined FleetBoston Financial and Bank of America are the three fund companies that have settled with both the SEC and Eliot Spitzer to date.

Putnam Investment Management

, a unit of

Marsh and McLennan

(MMC) - Get Report

, has settled only with the SEC and Massachusetts Secretary of the Commonwealth William Galvin.

Jeff Kiel, vice president at Lipper's global fiduciary review division, says the delay in restitution is understandable, since it's no easy feat for fund companies to arrive at a fair calculation for compensating millions of long-term investors burnt by market-timing and late trading in their mutual funds. Further slowing the process, says Kiel, is that the SEC is overseeing each and every move.

Alliance Capital's December 2003 SEC settlement called for the company to pay $250 million to shareholders, but company spokesman John Meyers could not offer a date for restitution would begin, saying that the "method of restitution is a multi-step process" and the company "is working within the framework of the SEC order."

While investors wait for Alliance and the SEC to finish their dance, fundholders have actually seen monetary returns from the company's settlement with Spitzer.

On Jan. 1, Alliance lowered its management fees by 20% to fulfill its agreement with Spitzer to deliver $350 million worth of fee reductions over five years. Although many analysts argue that the Alliance fee reduction only brings its fees into line with the competition, at least it's a tangible benefit for the funds' shareholders as they wait for their restitution funds.

Likewise, MFS spokesman John Reilly says "it's too early to tell" when investors should expect to receive the $225 million the company agreed to reimburse them in its SEC deal, in which it neither admitted nor denied any wrongdoing. But its agreement with Spitzer that calls for about $25 million in annual fee reductions over the next five years has been in place since March 1.

In their joint deal with the SEC announced just two weeks ago, Bank of America said it would pay $375 million to shareholders, while FleetBoston would reimburse them $140 million. Those shareholders will undoubtably see the benefits from the separate agreement the companies made with Spitzer's office far sooner. Under the Spitzer agreement, Bank of America and FleetBoston agreed to reduce their fees by a combined $160 million over the next five years.

Putnam is the odd duck of the four companies that have settled thus far. Instead of cutting a deal with the New York attorney general, Putnam drew Spitzer's wrath last November by settling with the SEC without determining a fine or a mandated fee reduction. Spitzer said at the time that "the SEC's document should not be viewed as a template for settlement with my office" and that his "office will continue an investigation of Putnam."

Putnam's status with Spitzer's office remains unchanged, but the company settled with the SEC last Thursday for $55 million. Putnam settled separately for an additional $55 million with Spitzer's peer in Massachusetts, Secretary of the Commonwealth William Galvin.

On the fee front, Putnam says it voluntarily reduced fees as opposed to being forced to do so by Spitzer's arm-twisting. Gordon Forrester, a managing director, says the company is saving investors $35 million by voluntarily reducing fees on its funds.

Putnam might have been better off joining Spitzer rather than fighting him. Investors pulled out $54 billion in assets from the company in the fourth quarter alone. Comparatively, the average withdrawal for companies named in the scandal was $32.1 billion during that period, according to a recent Investment Company Institute study, while untainted fund companies saw inflows of $86.7 billion. Putnam sources say the flow of funds has improved since January, but would not offer specific numbers.

Reduced fees are not the only benefit for shareholders invested in mutual fund companies that have settled with the SEC, with or without a Spitzer side deal.

"The compliance functions and the oversight of the companies that have settled have been elevated above today's industry standards," says Lipper's Kiel.

In their settlements, the companies agreed to numerous structural changes including new employee trading restrictions, enhanced employee trading compliance and oversight by an independent third party. The companies also expanded their use of redemption fees to deter market-timers. MFS, for example, now charges a redemption fee of 2% for exchanges and redemptions within five days of purchase for all its equity funds, whereas the fee was once only applied to its international and high-yield funds.

The most pronounced changes were in the area of corporate governance, where they adopted SEC policies that are still under review by the majority of mutual fund companies. Those changes include a requirement that 75% of the funds' board of trustees, as well as the board chairman, be independent from the fund's normal course of business.

Geoff Boboroff, president of a consulting company that advises mutual fund boards, says industry is most likely waiting for the SEC to adopt its final rules in the area of corporate governance before making any major changes to operations. Many of the SEC's rules were proposed in the winter and are now just coming out of "comment period," and that is why the fund industry's eyes are currently on Washington, where

the Senate Banking Committee is now holding hearings on mutual fund reforms and remedies, a process set to end April 8 with the testimony of SEC Chairman William Donaldson.

Mercer Bullard, an attorney and founder of the fund activist site, says he would be especially pleased if Congress took the lead and passed stricter fee disclosure and governance rules. During his recent banking committee testimony, Bullard says he told lawmakers that "all of the progress has been in the form of SEC rulemaking, but the most meaningful steps have to be taken by Congress."

Boboroff says it more plainly: "If the SEC won't regulate, then Congress will legislate."

And if Congress won't do its job, there's always Spitzer.