Welcome to the Blue Money Report

Boy! You sure are a terror. You are literally a one man crusade in the valley of fertile greed. How do you do it with such aplomb?

Over the last few weeks you have left my inbox with numerous emails and letters, some of which actually were run through a spell check prior to the writer hitting the send button. All of them referred to the same thing, in the same tone, and with the same spirit of shock.

You have taken the industry that prided itself on 80 years of scandal free investing and made it seem, well, almost human. Did you know going into this that someone like Richard Strong, head of Strong mutual funds, would stoop to swindling innocents like those letters writers and me out of $600,000 when he was worth 100 times that amount? Imagine that as a lesson that even a single percentage point is important!

When you began this investigation, did you think that we thought that the managers of our money were somehow angelic, noble in their deeds and honorable in their hearts? Did you think that we would have acted differently given the chance to change jackets with these people. Perhaps in the Ashcroftian America, it isn't too early to call these people criminals - guilty as accused.

Mr. Spitzer, the one thing that concerns me in particular is your method of announcing something many of us have long known or suspected. When you step up to the podium, whether it be a bank of microphones or a bank of mouthpieces such as those in Congress, it would seem to me that you do more damage to those you are trying to protect, if it is indeed the average investor who is at the heart of your efforts. I remember telling my wife, who is subject to the sixty second news media clips just like most of the investor class, that there is nothing for us to worry about. Why should I be put into such a position when you were in a better position to help those very jittery investors such as her?

In the days immediately following this scandal, the big pension funds took flight from many of the management teams that had controlled their investments quite nicely. This began the ripple effect that became too newsworthy. But what many of the members of the media failed to mention was the fact that securities were seldom sold when these fund management teams were fired. Shouldn't there have been some liquidation of assets? No and for a good reason, that everyone seems to have failed to point out. These managers, those dispicable miscreants had been hired to manage assets that were in many cases already owned by the pensions. Firing a Putnam manager did nothing but make a statement that the average investor would have liked to make but was not afforded the opportunity. You see, Eliot, can I call you Eliot, why this was not such a good idea. I am a Janus investor and a Strong investor. Many of the nervous Nellies who wrote me are also investors are the growing list of funds with crooked managers. All of them want to sell but none of them seem to know why.

That would be at the heart of my biggest peeve with what you have done. If I can make a suggestion on how you should have told us common folk, perhaps the next big scandal will be met with less confusion and more understanding.

For openers, perhaps you should have assured investors that you are chasing past history that, once you tell them what you have found, they can rest assured that it will not be part of any funds future. In other words, you could have turned the old disclaimer of "past results are not any indication of future returns" on its ear. Largely, "past results" were the future for many of the managers if you hadn't stepped in. Fund managers, you could have pointed out, are paid based on assets in the fund. Because those assets are the basis of a good many of these fund managers paychecks, you should have told us that method of remuneration would have to end. If you were paid to attract additional millions upon millions of dollars to the fund you managed and the paycheck you received because of it was your driving force, how could someone not fall prey to the lure of a lucrative market timing scheme? It becomes human foible writ large.

You could have told us that if we were comfortable with our mutual fund investment so far, that it will likely improve now that you have started to weed out the criminals. Sure, I have mentioned in more than one article over the years that the manager is a key element in picking a mutual fund, but it is not the only element nor is it the primary concern with so many computerized, indexed and team managed funds in the marketplace these days. You could have told us Eliot that investing is more than a just sending money off into a 401(k) before we have even seen it or to an IRA month after month. It seems that you have turned this whole "growing money in the markets" into a philosophical argument about honesty. Even Plato pointed out the financial distance of dishonesty from rectitude when he said: "Honesty is for the most part less profitable that dishonesty".

Reminding us that voting with our feet is not only the wrong strategy here but may very well be premature would have helped a little to allay our fears. In every one of these cases, you should have told the investor that they may be subject to exit fees should they run, they may harm the funds performance for the remaining shareholders, and that you were going to get back every last dime that was swindled from us unknowingly. But you didn't. And that is unfortunate.

It was no surprise that rich people, an ambiguous term meaning much wealthier than most of us, do not trust financial statements nor do they especially trust those movers and shakers on Wall Street, according to a CNN poll. Neither do you. But most of middle America has little choice in whom we trust with our money. For many investors, their first brush with Wall Street comes in the form of a choice of funds in their 401(k) plan at work. Too many opt for the default investment, which is often a simple money market fund. Too many of their co-workers opt for a suggested group of funds. And almost all of them, never give it much of another thought. Its wrong but it is how it operates for most. And perhaps that is the way it should be. You could have let us sleep at night knowing that you were on the job but instead, you let us know you were on the job by scaring most of us.