It's the second anniversary of the start of the mutual-fund scandal, but investors are not celebrating. They can't afford to, at least not...

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It’s the second anniversary of the start of the mutual-fund scandal, but investors are not celebrating.

They can’t afford to, at least not from the settlement monies that regulators have extracted from the wrongdoers. The combined fines and restitution paid by management firms settling charges of allowing favored investors to get special treatment have run into the hundreds of millions of dollars, but the few payout plans that have been approved make it clear that fund firms won’t be doing much more than buying shareholders a drink for their troubles.

At this point, it’s a safe bet that on every anniversary of the scandal — three years, five years, a decade — the common thread will be investor frustration.

“Investors need to move on,” says Geoff Bobroff, an industry consultant from East Greenwich, R.I. “If they still believe there is some big payday coming, they’re fooling themselves.”

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To see why, let’s revisit history and review some current events.

On Sept. 3, 2003, New York Attorney General Eliot Spitzer brought charges against several fund firms for allowing favored customers to have trading privileges that ordinary shareholders didn’t get.

Within months, the investigations had spread, and the Securities and Exchange Commission (SEC) was acknowledging a big problem with rapid-trading, where firms went against their own rules that limited quick turnarounds by customers, allowing a few customers to make countless trades, passing the cost of that activity on to everyone else.

In February 2004, SEC officials testified that they had found problems in half of the companies they had surveyed. At that point, 80 companies had been surveyed, which meant that investigators had issues with more than three-dozen firms.

Less than two-thirds of those firms have faced charges. The big names like Putnam, Strong, Janus, MFS, Alliance Capital and others pretty much raced to settle cases against them.

Most settlements required the bad guys to cough up some cash to repay shareholders for what they lost due to rapid trading.

Here’s where things get tricky.

Every fund group making restitution establishes a holding account for the money, then submits a distribution plan for that cash to a special consultant. The plan must be approved by the SEC before shareholders get a dime.

It’s not speedy. While regulators quickly set the fine amounts — although they left the door open in some cases on the chance they had not demanded sufficient dollars — they have been slow to use the same math to figure out what people are owed.

In the few cases where a payout plan has been approved — Putnam, MFS and, most recently, Morgan Stanley for a case which focused on conflicts of interest during the sales process rather than rapid trading — the distributions are tiny.

In the Morgan Stanley case, restitution came to $7.50 per account in most cases. An account with a half-million dollars in the affected funds could wind up with about $400.

Chuck Jaffe is senior columnist at CBS Marketwatch. He can be reached at jaffe@marketwatch.com or Box 70, Cohasset, MA 02025-0070.