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

Alliance Capital ( AC), MFS, a subsidiary of Sun Life Financial ( SLF), 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), 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."

Mutual Fund Scandal Scorecard
The price of justice may vary
Fund Company SEC Settlement Spitzer Settlement
(Fee Reductions / Period)
Spitzer Total
MFS $225 Million $25 Million/5 Years $125 Million
Alliance Capital $250 Million $70 Million/5 Years $350 Million
Bank of America/Fleet $515 Million $32 Million/5 Years $160 Million
Putnam $55 Million No Settlement**
** Denotes $55 million settlement with Mass. Sec. Of Commonwealth William Galvin.

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