Dump Investment Companies with Low Ethical Standards

by Hank

Don’t be afraid to get rid of investments and stop doing business with financial firms who behave unethically or questionably.  In 2003, several mutual funds were charged in scandals involving late trading, market timing, and other unethical behavior.  Several mutual fund companies were favoring large investors allowing them to rapid in-and-out trading in funds for quick gains to the detriment of many small long term investors.  In most cases, it this practice wasn’t illegal in 2003, but it increased a fund’s costs and diluted its gains hurting the average investor saving for retirement.


In 2004, a financial services and stock brokerage company very familiar to members of the military was charged in a Securities and Exchange Commission (SEC) and a National Association of Securities Dealers (NASD) investigation with misleading investors by selling mutual funds through an installment method called a systematic investment plan.  The systematic plans sold mutual fund shares in fixed monthly contributions over a period of at least 15 years. The plans imposed a unique sales charge or load that is equal to 50% of the plan’s first 12 monthly payments with no sales load thereafter. Should the customer make all of the required payments (180) over the 15-year period, the effective sales charge was approximately 3.3%.  If the customer failed to make all of the required payments, the effective sales charge would have been much higher. Historically, approximately 57% of the company’s customers failed to achieve the required 180 payments and substantially paid higher sales charge than is customary for load mutual funds.


There is no excuse for a financial services company or mutual fund company to behave poorly, and I refuse to invest in one that does.  I would even go so far as to transfer all of my investments away from an unethical company.  I was actually a customer of the financial company talked about above at one time in my career.  I didn’t like the “system” and lack of control I had over my investments with them.  So, I transferred the money I had invested in a mutual fund brokered through them to a different mutual fund that I picked through my own research.  Don’t be afraid to dump your mutual fund or other financial services companies if they behave unethically.


We are the masters of our own investing destiny.  Good research, persistence, and a little hard work can replace 95% of the advise companies like these can provide you.  Do not just turn your finances over to someone.  Do not invest in something you do not understand.  You owe it to yourself, your family, and your future to educate yourself and oversee your own finances.  No one cares more about you and your future than you.

Share and Enjoy: Bookmark and Share

{ 1 comment }

Ron Robins September 2, 2008 at 9:58 am

Great post!

I’ve been concerned about ethics in investment/financial industries for over forty years and it became a spur for me to create a site that focuses on ethical investing. My site also uniquely covers the latest global news and research on the subject. You might like to see it http://www.investingforthesoul.com

Best wishes, Ron Robins

Comments on this entry are closed.

Previous post:

Next post: