Gambling With Your Mutual Funds

Chicago, ILSo, you thought you were doing the smart thing by investing in mutual funds. You thought you were saving for your retirement or putting some money away for your children. But you did not realize that your mutual funds were invested in companies involved in illegal activity—at least, you did not realize it until the illegal activity was uncovered and you experienced dramatic mutual fund losses. Now, it may be too late to recover your losses through your investment, but it's not too late to consider a lawsuit.

At least one major mutual fund company, Vanguard Group Inc., faces a lawsuit related to its mutual fund investments. The company allegedly invested assets in companies that ran Internet gambling businesses, which are illegal in the US. Ten Vangaurd officers and trustees are named in the lawsuit, which claims that the company violated racketeering laws and breached their fiduciary duties to investors by investing in gambling-related enterprises.

The lawsuit seeks class action or group status on behalf of all similarly situated investors. It also seeks compensatory and punitive damages. A lawyer for the plaintiffs said that Partygaming Plc was one of a few Internet companies that Vanguard invested assets in.

Investors may have lost millions of dollars when their investments plunged in value after it became public knowledge that these Internet gambling sites were operating illegally. The lawsuit says that the mutual funds suffered "significant losses" once prosecution of the Internet gambling site operators began.

A Vangaurd spokesperson responded to the suit by saying that the company is highly ethical and would not knowingly invest the funds in companies involved in illegal activities.

In addition to the lawsuit filed against Vanguard, a similar lawsuit was filed against American Century Investments concerning its Ultra Fund, which is also alleged to have been illegally invested in Internet gambling sites. The suit alleges that losses related to those investments exceed $10 million.

A spokesperson for American Century denied the claims against the company.

Mutual fund losses have been massive over the past few months. Many investors, people who worked hard and saved their money with the hope of retiring and living off it one day, have seen their mutual funds drop dramatically in value. Some say they can no longer retire when they planned to because their investments have lost so much value. That is a terrible thing to face when you have put your money into an investment in good faith, expecting that everyone involved with the investment will also act in good faith.

It is one thing to lose money when the markets turn and the economy changes. It is another thing entirely to lose because your money has been invested with companies that operate illegal enterprises. Fund managers have a duty to ensure that money is invested in a manner that best represents its clients' interests—investing in an illegal operation can hardly be considered representing your clients interests.

With the markets taking such a terrible turn, it would be nice to think that the people in charge of your money are doing what is best for you. Unfortunately, that is not always the case. In some situations, they are only concerned with helping themselves. That is where the law can help you regain some of your lost money. If your mutual funds have lost value due to someone's unethical actions, you may be able to file a lawsuit to regain your money.