A majority of executives running pension schemes in the U.S. think that the market timing abuses uncovered by regulators are “systemic”, according to a report by Greenwich Associates.
In a survey of 131 funds, some 60 per cent said that improper trading - which is the subject of a major investigation by Eliot Spitzer, New York state’s attorney general - was systemic to the US mutual fund industry. But for those funds with money managed by firms under investigation - 76 were surveyed - some 71 per cent considered the problem to be widespread across the industry. John Webster, managing director of Greenwich Associates, said: “When the problem surfaced, the prevailing view was that there were a few bad apples. But that’s not how it’s viewed any more.”
He said: “People are very angry, and they want to see companies clean up their act. Some 54 per cent of funds viewed the problem as “very serious.”
Around two-thirds of them had discussed the issues with their investment consultant, investment committee or board of trustees.
In a series of follow-up interviews, Greenwich Associates found funds ready to express their dissatisfaction “in no uncertain terms”.
Fund executives wanted mutual fund firms to be “up front, conduct independent and external audits, clearly communicate the problems, and show resolutions to ensure that violations do not occur in the future”.