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Updated on November 24, 2011

Conflicts and Criminality Rife in Mutual Funds and Investment Banking

Prudential Financial, the life insurance company, agreed yesterday to pay $600 million to settle charges with federal and state regulators that one of its units engaged in inappropriate mutual fund trading.

The payment, the second-largest against a financial institution over the illegal practice, according to the New York Times, may bring an end to a three-year investigation [Very doubtful. It may bring an end to the investigation but not to the shady practices and conflicts of interest!] into market timing, late trading after markets close and other illegal, shady, questionable practices and conflicts of interest that have been found to be common among many if not all the big names in the industry including Merrill Lynch, Citigroup, Morgan Stanley, Bank of America, Fidelity, Edward D. Jones, Putnam, Smith Barney, Strong Financial Corporation, T. Rowe Price, J P Morgan Chase and others.

For the article in this morning's New York Times on the big Prudential settlement, click on the link below.

The two best books for mutual fund investors are

"Unconventional Success--A Fundamental Approach to Personal Investment" by David F. Swenson. Simon and Schuster 2005.

" Winning the Losers Game" by Charles Ellis, McGraw Hill.

Both authors question whether buying individual stocks is appropriate for most people. And both recommend investing in low cost domestic and international equity mutual funds such as the index funds offered by Vanguard. In addition, a portion of a balanced portfolio may/should also include an intermediate term U.S. government bond fund and a REIT (real estate investment trust) fund as well.


President Bush told the Wall Street Journal that privatization of Social Security is on his agenda for next year.


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    • Ralph Deeds profile image

      Ralph Deeds 7 years ago from Birmingham, Michigan

      Over a lifetime, expenses can have a devastating effect. Just 1 percent annually will eat away more than 40 percent of your nest egg over 60 years. That steady drain might well sink your retirement.

    • susanlang profile image

      susanlang 7 years ago

      Ralph: some months back you asked me for the name of someone. In response to this crook alert hub and your question. The answer is: John Eker. Some other public crook criminal records: Great crook hub Ralph, rated up!

    • Ralph Deeds profile image

      Ralph Deeds 8 years ago from Birmingham, Michigan

      The SEC is also looking into "dark pools" of funds which provide no public access to trades which tends to undermine faith in the fairness of markets according to Mary Schapiro, head of the SEC. (How many people have faith in the fairness of public markets?)

    • Ralph Deeds profile image

      Ralph Deeds 8 years ago from Birmingham, Michigan

      Flash trading which is analogous to betting on a horse race after the finish is another reason why ordinary investors in individual common stocks are at an unfair disadvantage vis a vis the Wall Street Banksters and hedge funds. It the SEC succeeds in banning flash trading, it won't be long before the banksters will find other ways of screwing the little guys in order to keep paying their multi-million dollar bonuses.