Great Western Urged to Stop Selling Funds

A group of investors who have sued Great Western Financial Corp. for alleged fraud in the marketing of mutual funds said it has submitted a resolution urging the Chatsworth-based thrift to stop selling the funds in its branches, and plans to run its own slate of candidates for Great Western’s board of directors.

Michael Linfield, an attorney who represents Seniors Against Investment Fraud, said the group hasn’t selected its candidates for Great Western’s board, but plans to do so within a couple of months. A vote will be held at Great Western’s annual meeting in April, he said.

The organization, whose members have picketed Great Western’s annual meetings for the last two years, also plans to press for adoption of its resolution at the next meeting, Linfield said. Although not binding, the action would urge the board to stop “misleading” customers by selling mutual funds side-by-side with traditional banking activities, Linfield said.

Great Western is the target of state and federal lawsuits brought by investors who say they were duped into believing the mutual funds sold by the savings and loan were federally insured. The thrift has denied the claims.

Ian Campbell, a Great Western spokesman, called the moves by the investors group perplexing, given that the thrift and plaintiffs are in serious negotiations to settle all litigation involving the mutual fund business.

The timing is also odd, Campbell said, because Great Western announced last month that it is considering selling its mutual fund subsidiary, Sierra Capital Management Corp.

The thrift will continue to sell mutual funds managed by other companies, Campbell said. But he argued that Great Western has already undergone a “full policy review” of its mutual fund operations.

Although no serious problems were found, he said, the thrift has made changes to improve disclosure to investors.