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American Morning
Minding Your Business: Morningstar Rips Into Mutual Funds
Aired September 15, 2003 - 07:44 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
SOLEDAD O'BRIEN, CNN ANCHOR: Some investors are being told to dump their mutual funds.
Andy Serwer is "Minding Your Business" this morning.
Good morning.
ANDY SERWER, "FORTUNE" MAGAZINE: Good morning, Soledad.
O'BRIEN: Scandal is a bad thing for your mutual funds (UNINTELLIGIBLE).
SERWER: Yes. That's right. We've got a scandal watch, a couple of scandal stories. Back to that again in business, as always.
I don't know if you've been following this one. New York state Attorney General Eliot Spitzer a couple weeks ago slamming a couple of giant mutual fund companies, saying that they engaged in improper and/or illegal -- can you imagine? -- trades that benefited a big hedge fund in New York City at the expense of ordinary investors.
Now this company, Morningstar, which is an independent company that monitors the mutual funds, is saying that you should sell your mutual funds in these four companies. We've got a quote here from them saying that: "We think that Spitzer's allegations of trading misdeeds at Bank of America, Janus, Strong and Bank One should prompt investors to consider selling their stakes in funds run by those firms." Strong stuff.
And Janus, of course, who was a real high flyer back in the days of the tech boom -- Bank of America obviously one of the biggest institutions in the country -- they're saying that you should be a little bit careful here, though, if you're an investor, because you should consider the tax implications of selling.
But what this really means is that it ain't over. This investigation continues, No. 1. And No. 2, if these companies engage in practices that benefit the big guys at your expense, why do business with them? Those are the two points.
BILL HEMMER, CNN ANCHOR: Yes. Bank One was down for a long time. The past year, though, it's made a pretty good run right now in terms of...
SERWER: James Dimon, the new CEO, coming back here.
HEMMER: That's exactly right. Hey, Martha's got a new ad out, huh? Boston Furniture (ph)?
SERWER: I kind of think this is genius...
HEMMER: Well, I mean...
SERWER: ... you know, I mean, bringing her in to do some advertising. Jordan's Furniture (ph) up there in Massachusetts, now owned by Warren Buffett's Berkshire Hathaway, hired Martha, that's Eliot and Barry Tatelman, the two guys who run that thing. And they're basically saying she's got a new line of furniture here, and she kind of gives them a little bit of grief, saying we always need more hydrangeas.
But I think it's a good idea. I mean, you know...
O'BRIEN: This is...
SERWER: ... it's contrarian.
O'BRIEN: Is it funny?
(CROSSTALK)
SERWER: It is funny. They poke fun at her, she pokes fun at them.
O'BRIEN: So not about her legal problems.
SERWER: No, they don't say, so, are you going to be bringing these flowers to jail? No.
O'BRIEN: Right.
SERWER: They don't do anything like that, no.
O'BRIEN: All right, let's take a look at the market and Wall Street for this week.
SERWER: Yes, last week actually was the first downer in about five weeks. You can see here not too bad, though, Soledad. We can live with a little bit of a pullback. And, in fact, futures are up this morning, so we could be looking at a higher open.
Bill, though...
HEMMER: Yes.
SERWER: ... I've got to talk to you a little bit about the Bengals.
HEMMER: All right.
(CROSSTALK)
SERWER: They got a little bit closer last week up against a good team in the Oakland Raiders. HEMMER: Yes.
SERWER: No one expected them to win against the former AFC champs, but they did OK -- only lost by three points.
HEMMER: O and 2.
SERWER: (UNINTELLIGIBLE) the tally.
HEMMER: There we go.
SERWER: Yes, this is the screen, Bill. I want you to focus here. Week one: loss. Week two, that would be...
HEMMER: Same old story.
(CROSSTALK)
SERWER: ... loss. Now, (UNINTELLIGIBLE) against the Steel City. I don't think so.
HEMMER: Well, Pittsburgh got -- they were walloped yesterday.
SERWER: Yes, they were.
HEMMER: Hey, but just for the record...
SERWER: They came very close against the Raiders.
HEMMER: Because I know Soledad was asking about this earlier today.
O'BRIEN: I'm, like, all over the football whole thing.
HEMMER: The Bengals were going for the winning score...
SERWER: Yes.
HEMMER: ... with about two minutes of play...
SERWER: Right.
HEMMER: ... on the 15 yard line of Oakland, interception runback.
SERWER: Yes.
HEMMER: So, they got that close. They teased us not to have interest for another week.
O'BRIEN: It doesnt count. It doesn't count. I don't know a lot about football, but I know that doesn't count.
SERWER: It doesnt count.
O'BRIEN: Close does not count. SERWER: It doesnt count. Jerry Rice is very upset, even with the win for Oakland. Did you see that?
HEMMER: You know what? I can't wait till next Monday (UNINTELLIGIBLE).
SERWER: Oh, well, there is some confidence.
O'BRIEN: All right, Andy, thanks so much.
HEMMER: See you later.
SERWER: OK.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.
Aired September 15, 2003 - 07:44 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
SOLEDAD O'BRIEN, CNN ANCHOR: Some investors are being told to dump their mutual funds.
Andy Serwer is "Minding Your Business" this morning.
Good morning.
ANDY SERWER, "FORTUNE" MAGAZINE: Good morning, Soledad.
O'BRIEN: Scandal is a bad thing for your mutual funds (UNINTELLIGIBLE).
SERWER: Yes. That's right. We've got a scandal watch, a couple of scandal stories. Back to that again in business, as always.
I don't know if you've been following this one. New York state Attorney General Eliot Spitzer a couple weeks ago slamming a couple of giant mutual fund companies, saying that they engaged in improper and/or illegal -- can you imagine? -- trades that benefited a big hedge fund in New York City at the expense of ordinary investors.
Now this company, Morningstar, which is an independent company that monitors the mutual funds, is saying that you should sell your mutual funds in these four companies. We've got a quote here from them saying that: "We think that Spitzer's allegations of trading misdeeds at Bank of America, Janus, Strong and Bank One should prompt investors to consider selling their stakes in funds run by those firms." Strong stuff.
And Janus, of course, who was a real high flyer back in the days of the tech boom -- Bank of America obviously one of the biggest institutions in the country -- they're saying that you should be a little bit careful here, though, if you're an investor, because you should consider the tax implications of selling.
But what this really means is that it ain't over. This investigation continues, No. 1. And No. 2, if these companies engage in practices that benefit the big guys at your expense, why do business with them? Those are the two points.
BILL HEMMER, CNN ANCHOR: Yes. Bank One was down for a long time. The past year, though, it's made a pretty good run right now in terms of...
SERWER: James Dimon, the new CEO, coming back here.
HEMMER: That's exactly right. Hey, Martha's got a new ad out, huh? Boston Furniture (ph)?
SERWER: I kind of think this is genius...
HEMMER: Well, I mean...
SERWER: ... you know, I mean, bringing her in to do some advertising. Jordan's Furniture (ph) up there in Massachusetts, now owned by Warren Buffett's Berkshire Hathaway, hired Martha, that's Eliot and Barry Tatelman, the two guys who run that thing. And they're basically saying she's got a new line of furniture here, and she kind of gives them a little bit of grief, saying we always need more hydrangeas.
But I think it's a good idea. I mean, you know...
O'BRIEN: This is...
SERWER: ... it's contrarian.
O'BRIEN: Is it funny?
(CROSSTALK)
SERWER: It is funny. They poke fun at her, she pokes fun at them.
O'BRIEN: So not about her legal problems.
SERWER: No, they don't say, so, are you going to be bringing these flowers to jail? No.
O'BRIEN: Right.
SERWER: They don't do anything like that, no.
O'BRIEN: All right, let's take a look at the market and Wall Street for this week.
SERWER: Yes, last week actually was the first downer in about five weeks. You can see here not too bad, though, Soledad. We can live with a little bit of a pullback. And, in fact, futures are up this morning, so we could be looking at a higher open.
Bill, though...
HEMMER: Yes.
SERWER: ... I've got to talk to you a little bit about the Bengals.
HEMMER: All right.
(CROSSTALK)
SERWER: They got a little bit closer last week up against a good team in the Oakland Raiders. HEMMER: Yes.
SERWER: No one expected them to win against the former AFC champs, but they did OK -- only lost by three points.
HEMMER: O and 2.
SERWER: (UNINTELLIGIBLE) the tally.
HEMMER: There we go.
SERWER: Yes, this is the screen, Bill. I want you to focus here. Week one: loss. Week two, that would be...
HEMMER: Same old story.
(CROSSTALK)
SERWER: ... loss. Now, (UNINTELLIGIBLE) against the Steel City. I don't think so.
HEMMER: Well, Pittsburgh got -- they were walloped yesterday.
SERWER: Yes, they were.
HEMMER: Hey, but just for the record...
SERWER: They came very close against the Raiders.
HEMMER: Because I know Soledad was asking about this earlier today.
O'BRIEN: I'm, like, all over the football whole thing.
HEMMER: The Bengals were going for the winning score...
SERWER: Yes.
HEMMER: ... with about two minutes of play...
SERWER: Right.
HEMMER: ... on the 15 yard line of Oakland, interception runback.
SERWER: Yes.
HEMMER: So, they got that close. They teased us not to have interest for another week.
O'BRIEN: It doesnt count. It doesn't count. I don't know a lot about football, but I know that doesn't count.
SERWER: It doesnt count.
O'BRIEN: Close does not count. SERWER: It doesnt count. Jerry Rice is very upset, even with the win for Oakland. Did you see that?
HEMMER: You know what? I can't wait till next Monday (UNINTELLIGIBLE).
SERWER: Oh, well, there is some confidence.
O'BRIEN: All right, Andy, thanks so much.
HEMMER: See you later.
SERWER: OK.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.
