Seattle Times – Five years ago, the mutual- fund world was rocked by the biggest scandal in its 80-year history.

Fund companies gave some customers trading privileges that weren’t open to everyone; those special interests — notably some hedge funds — engaged in rapid trading that netted quick profits at the expense of the average shareholder.

Headlines called it a "market-timing scandal," a misnomer since there’s nothing illegal about trying to time the market. The problem wasn’t even so much the quick-fire trades as it was the special privileges that let traders play games that the ordinary shareholder couldn’t engage in and actually paid for.

Now shareholders in scandal-tainted funds are starting to receive payments to compensate for their losses. The SEC just sent checks worth a total of $40 million to 600,000 Putnam investors. Another $18 million was distributed to some 325,000 Janus shareholders.

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