Geez, these guys just won't quit giving me material for my blog. Every time I run out of topics to write about, another scandal rears its ugly head. It's kind of like the monster with lots of different heads. A Hydra, I think it was. As soon as regulators cut off one type of scandal, another one pops up to take its place.

What's the scoop this time? Kickbacks, something new and different ;). Companies that provide back-office support for fund companies are being investigated by the SEC for overcharging fund shareholders for their services, then kicking back a percentage of those fees to the fund complex itself.

This is wrong for a couple of reasons. First, it defrauds fund investors, who are paying higher prices for services that may be inferior. As we all know, the higher the fees, the less the ultimate total return that you, the shareholder get to keep. And even to the degree that such small increments affect individual shareholders, any reduction in the rightful return that you gain from your investments affects the amount of money you have to meet your investment goals.

So, you lost there -- less return on your investment. Strike one.

Secondly, you're losing because the fund directors could have -- and should have -- selected a service provider with a lower cost, which would have boosted your bottom line. So another incremental loss there. A small fee bite here, another small fee bite there, pretty soon we're talking about real money.

That's strike two.

Thirdly, these companies that were paying kickbacks to fund companies are in some cases in charge of helping funds comply with new regulators that specifically outlaw this type of behavior. Talk about letting the fox loose in the hen house. So the company your fund hired to help it comply with regulations is taking kickbacks that break those very regulations in pursuit of business. Makes sense (not!).

Strike three.

Ooops, we actually have more than three strikes. Oh, well. This is so much fun we can't stop now.

Next, independent fund directors -- who supposedly are the watchdogs of fund management acting on the behalf of shareholders -- were intentionally kept in the dark about these business arrangements. Now how in the blazes can these indy directors do their jobs if they aren't fully informed about the business practices of the funds they are supposed to advise? But perhaps they didn't WANT to know.

No one is sure whether the companies accused of giving the kickbacks informed inside directors of what was going on or not. Inside directors are those affiliated with fund management. In other words, when the fund company that they work for makes more money, they benefit. Talk about self-dealing.

So that's strike four.

What makes me really sick about all of this is that running a fund company is already -- in and of itself -- a hugely and incredibly profitable business. It burns me that the very people who are supposed to be looking out for the interests of you -- the shareholder -- are instead profiting enormously and in some cases criminally from you.

That is JUST WRONG. Strike five.

Stay tuned -- no doubt there will be more news and analysis as this latest scandal unfolds and I'll keep y'all up-to-date.