Standard Insurance Drops Janus Funds From Retirement Plans

No later than December 19, the retirement plan manager said it will sever a fund management agreement and no longer offer the funds in its investment lineup that currentlyoversees about $2.1 billion in investor assets and offers about 50 different mutual fund selections.   The retirement division of Standard Insurance had approximately $185 million sunk into Janus mutual funds as of the end of 2002, according to a Reuters report.

The move by Standard Insurance echoes earlier calls by Morningstar for investors to dump their shares in the four affected funds caught in the wake of charges by New York StateAttorney General Eliot Spitzer (See  Morningstar Cautions Investors in Wake of Canary Scandal ).   Even though the research firm had harsh words for Bank of America, Janus, Strong, and Bank One, especially scathing remarks were reserved for Janus.  

Including in the harsh treatment was a strongly worded commentaryby analyst Brian Portnoy charging that Janus put its own profitability ahead of the interests of investors in its funds. Portnoy also cited poor performance of Janus funds in the bear market and a string of management departures – the combination of which constituted “three strikes” against the Denver-based fund.

To date, none of the fund companies have been charged with any wrongdoing, and Janus has statedit is conducting a review into the allegations and will reimburse shareholders if warranted.   H owever two types of trading violations have been tagged “fraudulent” by the Spitzer complaint– late trading, or buying mutual-fund shares after the market close at that day’s closing price; and timing, which involves taking advantage of market-moving events after the close of the market, when the funds’ daily price is set based on the net-asset value of the portfolio (See  Spitzer Fund Abuse Probe Pumps Out More Subpoenas ).