LABJ FORUM – More Financial Corruption?
It seems like the parade of scandals emanating from Wall Street will never end. The latest involves mutual funds. Regulators including the Securities and Exchange Commission and New York Attorney General Eliot Spitzer are probing widespread trading practices at mutual funds that benefited large institutions at the expense of individual investors. Already, there have been several indictments and resignations, and more appear to be on the way. So the Business Journal asks:
Has the recent scandal made you think twice about investing in mutual funds?
Jack Vrtar
Sales/Marketing Director
Custom Glass Etching of Los Angeles
I don’t really invest in mutual funds. But a person has to be optimistic and have confidence in the country that he or she lives in. I’m confident that the market will go up and we’ll move on. There’s nothing you can do to eliminate theft or corruption. That’s something that will be with us for the rest of our lives. We have to say: OK, that happened and let’s get on with our lives and rebuild. It’s like that in almost anything. You just have to have faith in things and move forward. This isn’t the end of the world.
Jack Marsteller
Principal
Towers Perrin
The scandal will not change my general investment strategy, but it will cause me to look more closely at disclosure for mutual funds. It makes me want to be more careful. I’m waiting to see more open disclosure for mutual funds before shifting more money into that part of the economy. The after-hours trading activity was a revelation and I think the credibility of some investment funds has been hurt. It’s something people are paying attention to, but I’m not sure it’s gotten to the point of being a big deal yet.
Jim Flagg
Internal Accountant
Ideal Pet Products
No. As far as I know, none of my funds have been involved in it, yet. The market is doing well in spite of everything that’s happened in the last few years. You have to take all these numbers with a certain grain of salt. It’s important to stay diversified and not put all your money in one fund. I’ve got mine spread across three fund companies. From what I’ve read, it’s pretty common to do favors for the larger traders. You just have to expect the unexpected.
George Coriaty
Owner
Sir Speedy Printing
No, I trust my broker and I believe that they’re going to be conservative enough to make the correct investment decisions with me. I think that like anything else, during difficult economic times, people are under pressure to continue to make more money and they make poor decisions that affect so many people. That’s typical of what the country has been through in last three years. It’s obvious people in financial institutions have made some poor decisions over the years. During growing economic times, you have people becoming extraordinarily rich, but during bad times, people are desperate. I think a lot of it has to do with media coverage.
Laura Ruiz
Artistic Director/Founder
Lyric Opera of Los Angeles
No, I think it’s an isolated incident, not a universal sort of a problem. That’s my uneducated opinion. I have an innate positive view of people and I think that the average Joe just isn’t going to be doing things like that. Most people are fairly honest and these things that have probably been going on for awhile are simply becoming more public. That’s fine, but I don’t think it’s any worse than it’s always been.
